Daily Range Projections

Price movements during the next trading session depend on the correlation between the current closing and opening levels:

• if close < x =" (">
• if close > open, then X = ( H + L + C + H ) / 2;
• if close = open, then X = ( H + L + C + C ) / 2.

The forecasted high for the next trading session is:

H₊₁ = X – L

and expected low is:

L₊₁ = X – H.

If the next trading session opens within the predicted price range, then it is expected that the resistance level will be at the predicted high and the support level will be at the predicted low. If the open price is not within the predicted range then:

• Ignore the price range forecasted before.
• Correct the range by shifting the calculated low (high) a bit lower (higher) than the predicted high (low) if the market opens higher (lower).

source : www.alpari.com