Forecasting Monthly Trading Ranges from Two Years of Price History
Summary
This document describes a trading-range forecasting tool intended for monthly candlestick charts, primarily for forex pairs. It estimates the likelihood that a chosen pip range will be reached using historical trading ranges from the prior two years and a statistical forecast. The resulting information is displayed on the chart and may help a trader choose a take-profit level for a monthly position.
The tool is presented as an aid to target setting when paired with a separate method for determining trade direction; it does not itself provide that directional signal. The document specifies chart and price-format conventions, including a separate version for yen pairs. It offers no sample forecasts, validation results, or details about the statistical model, probability calibration, or handling of changing volatility. Its usefulness therefore depends on the quality of the direction method and on whether historical ranges remain relevant to current conditions.
Key ideas
- The tool estimates the chance of reaching a selected pip range from two years of historical trading ranges.
- It is designed for monthly charts and can inform take-profit placement.
- A separate directional method is needed to guide the trade.
- The document gives no forecast validation or details on probability calibration.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.