Daily Range Projections

Research has shown that tomorrow’s price range is influenced by the relationship between the current day’s price close versus the current day’s price open. There are three possible relationships between the close today and the open today.

1. The close today is less than the open today;
2. The close today is greater than the open today;
3. The close to day is equal to the open today;

If relationship 1 exist, use the following formula to project the range for the following day:

(High today + Low today + Close today + Low today)/2 = X

Tomorrow’s projected high = X – Today’s low

Tomorrow’s projected Low = X – Today’s high

If relationship 2 exists, revise the formula as follows:

(High today + Low today + Close today + High today)/2 = X

Tomorrow’s projected high = X – Today’s low

Tomorrow’s projected low = X – Today’s high

If relationship 3 occurs, make the following adjustments:

(High today + Low today + Close today + Close today)/2 = X

Tomorrow’s projected high = X – Today’s low

Tomorrow’s projected low = X – Today’s high

If price opens within the projected price range and you are a day trader, anticipate resistance above the projected high and expect support at the projected low. More
Importantly should price open outside the projected range – above the projected high or below the projected low – the supply – demand balance had shifted significantly enough
To imply that the short-term price trend will continue in the direction of the opening breakout. Two options exist for the short –term trader if such a breakout occurs:

1. Ignore the projected ranges for the day;
2. Adjust the value for the projected low to just below the projected high in the case of an upside breakout; conversely, revise the value for the projected high to just above the projected low in the case of a downside breakout.

Note: I got it from a book named "The New Science of Technical Analysis". No Guarantee that this performance will continue.