Dynamic Range Analysis!!!

In the world of trading and investing, it's important to have a clear understanding of assets phase - whether it's bullish, bearish, or sideways - and whether it's trending or not. This information is essential for making informed decisions about when to enter or exit a position. While we previously discussed the latter part in Understanding the Gap Ratio, without a clear understanding of an asset's phase, this information is incomplete.


Dynamic Range Analysis is a technical analysis tool that uses 1 standard deviation ranges of multiple moving averages to derive an asset's phase and dynamic support and resistance levels. The moving averages are set at logical Fibonacci numbers, with time frames of 1, 2, 3, 5, 8, and so on up to 377. The 1 standard deviation range is extracted from each moving average, providing a 66% chance of keeping the deviational movement within the range as per the theory of Normal distribution. Any movement that breaks either side of this range is considered an outlier and creates opportunities for the asset's to move further towards the 2 standard deviation range. Breaking the 2 standard deviation level is much harder without any big external events like changes in monetary policy, COVID-19 threats, national elections, or results.


If the asset is positioned between the upper ranges, it is considered to be in a bullish trend, while positioning in the lower ranges indicates a bearish trend. An asset positioned between one upper range and one lower range is typically considered to be moving sideways. However, it's important to note that other factors, such as technical breakouts, fundamental analysis, market news, and the GAP ratio, can also influence the market trend. Therefore, it is recommended to consider these factors alongside the Dynamic Range Analysis to make informed trading and investment decisions.


                                                        Bullish MA Range

                                                        Bearish MA Range

 Sideways MA Range

Understanding an asset's phase and whether it's trending or not is essential for successful trading and investing. Dynamic Range Analysis provides a useful tool for determining a stock's phase and support and resistance levels, but it's important to consider other factors that can influence the market trend to make well-informed decisions.

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A dynamic professional with around 22 years’ rich experience in Marketing, Business Development and Business Analysis. But above all, a passionate Capital Market Analyst and option trader for last 20 years with in NSE/ BSE and cryptocurrencies.

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