Support And Resistance Probabilities
The script evaluates the probability of breakdown of support and resistance lines, and will be useful for traders who use graphic analysis. Support and resistance lines user builds. Blanks lines are created when the script is run. It refers to an event, "the closing price above the resistance line," under the resistance breakdown. The breakdown of support - event, "the closing price below the support line." On the chart, the dependence of the probabilities of time in the future. A vertical line on the chart determines the time for which the probability table is displayed. The timing of the time by moving the vertical line.
For the user-selected points in time, the table displays the probability of the following events
- price above the resistance line
- price below the support line
- the price is between the support and resistance lines
These three events cover all possible scenarios of price position, ie, constitute a complete group of events.
Knowledge of these probabilities will help when setting the levels of stop-loss and take-profit and limited orders.
Method of calculation is based on the Black-Scholes model, which assumes a random character of the movement and the lognormal distribution of the increments of the commodity price. The model takes into account the trend, volatility and the duration of the time interval for which the probability estimates are made.
Input parameters
- Period (bars) - the number of bars that are taken into account in assessing the trend and volatility
- distance to the comment from the left - distance from the left edge of the screen in pixels to comment
- distance to the comment from the top - distance from the top edge of the screen to a comment in pixels
How to use
The script works on any frame and any currency pair. It is necessary to highlight the support line (green line) and resistance (red line) and install them on the chart. The lines can form any shape - channels, triangles, wedges or have an arbitrary location and inclination. Bar graphs represent the probabilities of events "above resistance" and "the lower support line." The table shows the values corresponding to the time, which is defined by a vertical line. Selecting and dragging the line, you can choose the moment of interest in the future.
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