Percent Change of Range Candles

Percent Change of Range Candles 2.0 – Explanation and Usage Guide - with a new visual display
Purpose of the Indicator
This indicator measures the percentage change in price relative to the total range (high - low) over a defined period. Its primary function is to display trend strength — whether the price has significantly risen or fallen in relation to its historical high and low over the selected length.

It serves as a tool for identifying momentum shifts, extreme zones, and potential entry and exit points.

How It Works
Main signal (c):

Calculated as the difference between the current close and the close length periods ago, divided by the total range over the same period.

The result is multiplied by 100 to express it as a percentage.

Positive values indicate bullish pressure, and negative values indicate bearish pressure.

Supportive lines (o, h, l):

o is the average of the last 5 values of c – used to observe momentum smoothing.

h and l are adaptive values based on short-term recalculations (25% of the main length), adjusted depending on the current direction of the trend.

Indicator Levels and Their Meaning
Level Meaning
0 A key boundary between bullish and bearish zones. Proximity to this line often suggests consolidation or a potential reversal.
+70 Strong bullish momentum. May indicate overbought strength – potential for a pullback.
+100 Extreme overbought zone. This could signal market exhaustion and an upcoming drop.
-70 Strong bearish momentum. Could indicate oversold strength, but still within a trending market.
-100 Extreme oversold zone. Signals a possible reversal or at least a short-term bounce.

How to Use It in Trading
Around the Zero Level (0):

This is the neutral zone. When c approaches zero after a strong trend, it can indicate momentum weakening and a potential trend shift.

A cross from negative to positive values could signal early bullish reversal.

A cross from positive to negative could indicate early bearish reversal.

Extreme Levels ±100:

These are not automatic "buy" or "sell" signals but mark extreme market conditions.

Approaching +100 suggests the market has risen too much, possibly overheated – be ready for a correction.

Approaching -100 suggests the market has fallen too much, potentially oversold – be prepared for a recovery.

Best used in combination with other filters like RSI, MA, price action, or volume.

Visual Interpretation
Green line (positive c) represents bullish momentum.

Red line (negative c) represents bearish momentum.

Gray lines (o, h, l) help visualize averages and wicks of the price move for better understanding of the internal price dynamics.

Conclusion
The Percent Change of Range Candles indicator is useful for:

Tracking medium-term price momentum.

Detecting overbought/oversold conditions.

Identifying consolidation phases and possible reversals.

For best results, use it in combination with other indicators and with a broader view of market context (e.g., higher timeframes).