Daily High/Low probability zones

The Daily High/Low probability zones indicator analyzes the statistical distribution of historical daily price extremes relative to the previous session's range to project high-probability reversal or extension zones. This tool helps traders identify where the current session's high and low are most likely to form based on a user-defined historical lookback period.

Usage

The Usage section describes how the script can be used to anticipate daily price extremes. The indicator projects twelve 25% segments based on the Prior Day High (PDH) and Prior Day Low (PDL), covering a range from -100% to +200%.

• Identifying High-Probability Extremes: The script automatically highlights the segments where the daily High (gold fill) and daily Low (orange fill) have most frequently occurred within the lookback period.
• Trend vs. Mean Reversion: High probabilities concentrated within the 0–100% range suggest a market prone to mean reversion. Conversely, high probabilities in the extension zones (above 100% or below 0%) indicate trending or breakout characteristics.
• Contextual Filtering: Traders can use these zones alongside session opens or news events to determine if a move into an extension zone is a likely exhaustion point or a continuation signal.

Details

The script calculates the position of historical highs and lows as a percentage of the prior day's range. For example, a high formed exactly at the PDH is registered at 100%, while a low at the PDL is 0%.

• Segment Distribution: The area is divided into 12 equal bands. Inside the range (0–100%) is teal, upside extensions (>100%) are indigo, and downside extensions (<0%) are red.
• Calculation Method: It utilizes request.security on the daily timeframe with lookahead_off to ensure historical accuracy without bias. A minimum of 5 valid trading days is required for the calculation.
• Out-of-Bounds (OOB): The indicator tracks occurrences where the daily extreme falls outside the projected -100% to +200% window, which is particularly useful for volatile assets.

Settings

Core Settings

• Lookback (days): Sets the number of prior sessions used for the statistical sample (Default: 250).

Visual Settings

• PDH/PDL line colour: Sets the color for the previous day's high and low anchor lines.
• Inside range colour (0–100%): Sets the color for boundaries within the prior day's range.
• Extension above colour (>100%): Sets the color for boundaries above the PDH.
• Extension below colour (<0%): Sets the color for boundaries below the PDL.
• Label text colour: Adjusts the color of the probability labels.
• Segment line style: Toggles between Solid, Dotted, or Dashed lines for segment boundaries.
• PDH/PDL line style: Toggles the line style for the main anchor lines.
• Top High% band fill colour: Sets the highlight color for the most frequent High segment.
• Top Low% band fill colour: Sets the highlight color for the most frequent Low segment.

Table Settings

• Show probability table: Toggles the visibility of the on-chart summary table.
• Table position: Moves the table to different corners or sides of the chart.
• Table text size: Adjusts the font size within the table.

FAQ

How do I interpret the percentage labels on the segments? The labels (e.g., H:18% L:34%) represent the historical frequency of the daily high and low forming within that specific 25% price band over the selected lookback period.

Why are the zones not showing up on my daily chart? The indicator is designed for intraday timeframes (1m to 1h). On a daily timeframe, the lines will only appear on the current single candle, as the calculations rely on intra-day movement relative to the daily boundaries.

How can I access the Daily High/Low probability zones? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.