One aspect of technical trading is market volatility, which can give traders a better understanding of market behavior and its potential movements.
The Constant Range Detector Indicator is a useful tool for measuring market volatility when combined with other technical indicators.
How the Constant Range Detector Indicator Works?
The Constant Range Detector Indicator uses a straightforward algorithm that takes the price range of the most recent closed candle as a starting point for estimating the price range. It essentially extends the data from the previous candle and calculates the difference between its highest and lowest price
The calculated amount is the price range of the previous candlestick depicted with several decimal points. The range value is then multiplied by 10,000 to convert it to pips. In case the currency pair ends with “JPY,” the indicator would multiply the difference by 100 to change the value to pips.
Constant Range Detector versus Average True Range
The Constant Range Detector is a handy tool for analyzing market trends when compared to the Average True Range (ATR). If the Constant Range Detector consistently shows lower values than the ATR, it may indicate that the market is starting to contract
If the Constant Range Detector value suddenly increases and is much higher than the ATR, it may suggest a momentum breakout or the beginning of a market contraction phase.
Conclusion
When you first look at the Constant Range Detector Indicator, it might not appear to be very helpful for technical trading. However, if you use it in the right way, this indicator can be highly useful for traders.
By watching market volatility, expansions and contractions, and momentum breakouts, traders can find valuable information using this indicator.It’s especially helpful when compared to other indicators of volatility such as the Average True Range and volume.
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