CD_Average Daily Range Zones- highs and lows of the day

The CD_Average Daily Range Zones indicator projects potential intraday high and low areas by calculating the 5-period and 10-period average daily ranges relative to the current day's opening price.

Usage

The Usage section describes how the script can be used to identify potential exhaustion points or reversal zones during a trading session. Traders typically use these zones as dynamic support and resistance levels.

• Resistance/High Zones: When the price approaches the upper shaded area (calculated using the 5 and 10 ADR values), it indicates the asset has moved significantly relative to its recent volatility. This may suggest a potential pullback or the session high.
• Support/Low Zones: When the price reaches the lower shaded area, it suggests the asset is stretched to the downside, potentially identifying areas where buyers may step in.
• Intraday Targets: Scalpers and day traders can use these zones as take-profit targets for existing positions, as price often finds friction at these boundaries.

Details

The script utilizes the Average Daily Range (ADR), which is the Simple Moving Average (SMA) of the high-to-low range over a specific number of days. The calculation follows these steps:

1. Data Retrieval: The script requests the current day's opening price and the ADR values for the previous 5 and 10 trading days.
2. Calculation: To forecast the high and low boundaries, the ADR is halved. The upper boundaries are calculated as Daily Open + (ADR / 2), and the lower boundaries are Daily Open - (ADR / 2).
3. Non-Repainting Logic: By using the daily opening price and historical daily ranges, the levels remain static throughout the trading session once the day begins, ensuring the signals do not repaint.
4. Zone Construction: The area between the 5-period and 10-period calculations is shaded to create a "volatility zone" rather than a single price line, accounting for variations in recent market momentum.

Settings

• ADR High10: Sets the visual style for the upper boundary based on the 10-day Average Daily Range.
• ADR LOW10: Sets the visual style for the lower boundary based on the 10-day Average Daily Range.
• ADR High5: Sets the visual style for the upper boundary based on the 5-day Average Daily Range.
• ADR LOW5: Sets the visual style for the lower boundary based on the 5-day Average Daily Range.
• Low Zone Fill: Toggles the background shading between the 5-day and 10-day lower ADR levels.
• High Zone Fill: Toggles the background shading between the 5-day and 10-day upper ADR levels.

FAQ

How does this indicator help in identifying trend exhaustion? The indicator identifies exhaustion by highlighting price levels that represent the statistical limit of an asset's typical daily movement. When price penetrates these zones, it is often considered "overextended" for that session.

Does this indicator work on all timeframes? While the indicator can be viewed on any intraday timeframe (such as the 5-minute or 1-hour chart), the calculations are always based on daily data to provide relevant intraday support and resistance levels.

How can I get access to the CD_Average Daily Range Zones? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.