Measuring price and time ranges
As you might expect, we get quite a few “how do I…?” questions here at Optuma Towers and we try to update the KnowledgeBase and create Quick Tip videos to help clients find what they need, but this particular query has come up a few times this week, which I thought I’d share.
The question was along the lines of “what’s the best way to count time and price movements on the charts?” Like many things in Optuma, there can be a number of different ways to achieve this, so here are some examples of some of the tools that we have available, which can be particularly useful in presentations or reports.
This tool can be used to count price change between two user-defined points (click here for the KnowledgeBase article). The tool can be set to show the percentage change between the two points, the price change, or both. There is also a Repeat property which can be used to identify potential target levels, along with an expansion factor.
In this example, the the weekly chart of gold on the left measures the 2016 move of 329 points – or 31.4% – which is repeated twice more. The chart on the right takes the 186.48 point move and expands each repeated level by 1.382:
This tool can be used to count the distance in time between two user-defined points. The options can be set to bars (trading days on a daily chart), calendar days, weeks, etc. In this example the measure between the first two highs in the VIX was 223 trading days, with the major high occurring 448 calendar days after that. As with the Price Measure, the values can be repeated and expanded, which can help identify potential cycles.
Time Price Measure
As the name suggests, this is a combination of the two tools, which measures the time and price between two points. The tool includes a number of labels which can be turned on or off including the dates and prices, with the added flexibility to create your own label. In this example, (P1+P2)/2 has been added to show the midpoint of the range:
Time Price Labels
The previous tools all measure between two points, but what if you wanted to measure more than that? You could apply the tools multiple times, or you could use the Time Price Label tool (TPL). This allows you to apply an anchor label, and then by selecting the Add New Label option under the tool’s Actions you can add multiple labels, each one counting from the previous.
Note: when applying three or more labels the tool can calculate retracement measures of the previous label range.
In this example on a 15 minute chart of Bitcoin, the 6.4% move up from the anchor point at Label 1 to the high at Label 2 took 159 bars (or 1 day, 15 hours and 45 mins), and then 56 bars to retrace 50% of the range.
Range From Extremes
The last tool I’ll mention is the Range From Extremes which is a slightly different tool from the others, but just as useful. This tool will automatically calculate the price move from the highest high or lowest low over a user-defined period. As such, it does not require you to manually place the tool on the chart as it will automatically calculate the range from the high / low extremes to most recent closing price. This range can be expressed in either percentage, standard deviations, or Average True Range values.
Here we see the RFE tool set to 6 months for the SPDR Technology ETF, which tells us that it’s currently 10.92% off the 6 month high, and 67% above the 6 month low:
Because the Range From Extremes is a tool that is automatically calculated, it can be used in watchlists using the RFE() function. Add RFE() to the scripting window and click on it to select the lookback period, high/low, and measurement. In the above example the % from 6M High column is calculated using the following (note the division by 100 to display as a percentage in a watchlist):
RFE(BACKTYPE=Months, BARS=6, DEFAULT=High)/100
The low column:
RFE(DEFAULT=Low, BACKTYPE=Months, BARS=6)/100
These are just a few examples of some of the tools we have to help with analysis – and don’t forget that with the scripting language you can create your own tools, such as the 50% level of the all time high. If there are any other types of tools that you would like to learn about, let us know or post in the client forum.
Darren Hawkins, MSTA
Senior Software Specialist at Optuma
Darren is the senior Software Specialist at Optuma. He joined the company in 2009 after attending an introductory technical analysis course. Darren now instructs users all over the world, from experienced Wall Street traders and professional money managers to individual traders drawing their first trendlines.
Darren grew up in the UK and attended college in the USA where he earned a BA in Economics from St Mary's College of Maryland. He went on to spend a few years working at the Nasdaq Stock Market in Washington DC. Going on to live and work in Australia, the US and currently the UK, Darren has a broad understanding of the individual needs of traders, portfolio managers and investors utilising a wide range of methodologies.
In 2014 Darren passed the UK-based Society of Technical Analysts diploma course, and when not looking at charts he keeps a keen eye on England's cricket team - especially if they are playing against Australia. He lives in the Essex countryside in England, with wife Wendy and their labrador, Gabba.