Using Close-Price Histograms to Map Price Zones

Summary

This indicator groups closing prices from a user-selected lookback window into equal-width intervals and plots their frequency as a histogram. Users choose the sample count and number of bins; the example settings use 150 observations divided into 30 classes. An optional display reports each interval’s bounds and occurrence share, while a chart mode draws the upper and lower prices of a selected class over the price chart.

The author proposes using the distribution to inspect whether prices look approximately Gaussian, estimate possible support and resistance areas, and frame profit targets or loss risk. These are exploratory uses rather than validated trading rules: the document supplies indicator code and intended applications, but no empirical tests or performance evidence. Results depend on the chosen window and bin width, and a histogram of past closes does not by itself establish that a price zone will constrain future movement or that returns follow a normal distribution.

Key ideas

• The indicator bins closing prices over a chosen lookback window into equal-width price intervals.
• A frequency histogram shows how often closes fell into each interval.
• A chart overlay can mark the boundaries of a selected price class.
• The author suggests using the distribution to explore price zones, statistical shape, targets, and risk.
• The document offers no tests showing that these zones predict future support, resistance, or returns.

Tags

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