Calculation

OHLC Range Map Calculation

The OHLC Range Map is a sophisticated tool designed to provide deeper insights into market dynamics by analyzing candlestick data using two core statistical methods:

• Mean

• Median

• KDE

These methods, coupled with insights into manipulation and distribution phases, empower traders to make more informed decisions based on price action.

1. Mean Method

The Mean method calculates the average of the Open, High, Low, and Close values of a candlestick. This approach provides a balanced representation of price action, helping traders identify central tendencies and equilibrium levels.

Combined with manipulation and distribution insights, the Mean offers a clear understanding of price movement within a candlestick.

• Bullish Candle:

  • Manipulation: Defined as the range between the Open and the Low, representing deceptive price movements intended to mislead traders before the upward trend.

  • Distribution: Defined as the range between the Open and the High, representing the true extension of price in the bullish direction.

• Bearish Candle:

  • Manipulation: Defined as the range between the Open and the High, indicating misleading price movements intended to lure traders before the downward trend.

  • Distribution: Defined as the range between the Open and the Low, showing the actual extension of price in the bearish direction.

2. Median Method

The Median method focuses on the middle value within the OHLC dataset, providing a robust measure of price action that minimizes the influence of outliers.

By isolating the most central data point, the Median is particularly effective in volatile markets, ensuring the analysis remains unaffected by extreme wicks or spikes.

When applied in conjunction with manipulation and distribution phases, the Median highlights stable zones and reliable price levels for potential trade entries or exits.

3. Kernel Density Estimation

The Kernel Density Estimation (KDE) method focuses on identifying the most probable price levels within the OHLC dataset by estimating the underlying distribution of price action. Unlike simple averages or medians, KDE provides a smoothed view of the data, capturing subtle patterns and price clusters while minimizing the impact of outliers.

By modeling the distribution with a continuous curve, KDE is particularly effective in volatile markets, as it highlights zones of price stability even amidst rapid fluctuations.

When applied in conjunction with manipulation and distribution phases, KDE reveals densely populated price areas, offering reliable zones for potential trade entries or exits.

Period Options

The algorithm includes a range of configurable period options, allowing traders to adapt statistical calculations to different market conditions. These periods determine how data is aggregated and how the Mean and Median are calculated over time.

• 5 Candles: Short-term analysis, ideal for intraday traders seeking immediate price action insights.

• 20 Candles: Medium-term perspective, suitable for swing traders looking to capture broader trends.

• 40 Candles: Balanced timeframe for detecting intermediate trends and price levels.

• 60 Candles: Longer-term view for assessing significant market phases and identifying major support/resistance levels.

• Custom: Fully customizable period, enabling traders to tailor the algorithm to specific strategies or unique market conditions.

• Maximum: Includes all available candlesticks, offering a comprehensive view of the market's historical behavior.

The chosen period directly affects the statistical outputs and how traders interpret key levels:

• Short Periods (e.g., 5, 20): Highlight recent market activity, making them highly responsive to current trends but more sensitive to noise. Useful for identifying immediate manipulation and distribution ranges.

• Long Periods (e.g., 40, 60): Smooth out short-term fluctuations, offering a clearer picture of underlying trends and significant liquidity levels.

• Custom and Maximum Periods: Provide flexibility to capture unique patterns or analyze market behavior over extended durations, enhancing strategy customization.

By integrating the Mean, Median and KDE methods with dynamic period options, the OHLC Range Map Algorithm empowers traders to analyze market behavior with precision and adaptability.

Shorter periods cater to fast-moving markets, while longer and customizable options ensure relevance across varying strategies.

Combined with manipulation and distribution insights, this tool offers a comprehensive framework for understanding and navigating price action effectively.