DR/IDR Candles

This innovative trading indicator is a powerful tool designed to display defining ranges (DR) and implied defining ranges (IDR) using two customizable user-defined sessions. It graphically represents these ranges as candles on your chart, offering traders a visual method of analysis. Moreover, the indicator integrates additional graphical features to enhance the original concept of DR/IDR, making it not just a technical indicator but a comprehensive graphical analysis method.

One of its unique features is its ability to display Fibonacci retracements based on the constructed DR/IDR, providing traders with deeper insights when enabled within the settings.

Key Configuration Settings

• Regular Session: Toggle the visibility of the regular session’s DR/IDR and set the session time, defaulting to 09:30 - 10:30 AM.
• Overnight Session: Enable or disable the overnight session’s DR/IDR, with a default session timing from 03:00 - 04:00 AM.
• UTC Offset: Configure the UTC offset to adjust for time zones, with a default setting of -5 (EST).

Retracements Features

• Reverse: Enables inversion of the source range’s upper/lower value for retracement construction.
• From: Determines the source range for building retracements, defaulting to the use of DR.

By default, the indicator displays the 0.5 retracement (average line) for easy reference.

How to Use the Defining Ranges (DR) & Implied Defining Ranges (IDR) Indicator?

Highlighted by a gray background, the sessions used in this indicator create a vivid picture of trading dynamics. Dashed lines represent DRs, while solid lines illustrate IDRs. The highest and lowest prices in each session are marked with solid wicks, give traders an essential snapshot of market movement.

Colors play an important role in this indicator. If the price is above the DR maximum, a blue hue is used, while an orange shade denotes prices below. Gray signifies that price is nestled within the DR range. This color coding allows traders to quickly assess market conditions and potential support/resistance zones.

Additionally, the background of the chart highlights the frequency of price staying within the DR range, with extended backgrounds indicating frequent occurrences, presenting an excellent way to assess the significance of DR levels as support or resistance.

When the price exits the IDR range, the gap between the price and IDR is color-coded: blue for above, orange for below. This indicator provides traders a straightforward way to evaluate market trends.

The DR/IDR Trading Rules

The original creator of the DR/IDR concept, trader TheMas7er, proposed three strategic rules:

1. If the price on the 5-minute timeframe closes above the DR high after 10:30 AM or 04:00 AM, the DR low will likely be the session’s low.
2. If the price closes below the DR low after the specified times, the DR high is expected to be the session’s high.
3. A close above the IDR high post the session indicates that the DR’s low might be the day’s low and vice versa.

These rules illustrate conditional probabilities specifically designed for these ranges. While they offer guidelines, no precise statistical backing ensures their accuracy due to market unpredictability. Traders should be aware of the limitations, such as time zone dependency and market applicability.

FAQ

How can I access the Defining Ranges and Implied Defining Ranges indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

Are there any guarantees for the trading rules provided?

There is limited statistical data supporting the probability of the outlined rules. Market conditions are highly stochastic, so results may vary.

Who is the original creator of the DR/IDR concept?

Trader TheMas7er originally created the DR/IDR concept in November 2022, and this script applies his trading session times and rules.