Using Candle-Range Envelopes to Flag Unusually Large or Small Bars

Summary

The Candle Range Envelop indicator plots candle size as a histogram alongside an average range and an envelope channel. Users can set the averaging period, signal period, deviation period, channel width, and upper and lower envelope percentages. They can also choose whether candle size means the full high-to-low range, including wicks, or the open-to-close body.

Bars within the channel appear gray, bars above the upper envelope green, and bars below the lower envelope red. The channel can be calculated from standard deviation or from a percentage of deviation. This makes the indicator a configurable way to identify candle ranges that are unusually large or small relative to recent history. The document describes the indicator’s construction and display, but gives no trading rules, market examples, or performance tests. A color change alone therefore does not establish a directional signal or show that the indicator predicts future returns.

Key ideas

• The indicator compares each candle’s size with an average and an envelope channel.
• Candle size can use either the full high-to-low range or the open-to-close body.
• Envelope settings include period, width, and a choice between deviation-based and percentage-based calculations.
• Histogram colors distinguish candles inside the channel from those above or below it.
• The description does not establish trading rules or predictive performance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.