Introduction and description of the new chart type, Range bars.

Basics of construction. Main signals. Special features of Range charts application.

Dear friends,

Today, I’m going on my educational block that is devoted to unusual price charts. I have already described such charts as Renko, Line Break chart, Kagi, Tic-Tac-Toe (part 1 and part 2).

Range bars is the most recent chart type of all.

This chart type became available on tradingview not so long ago, on June 21, 2018.

Perhaps, its only and the most important feature is that the Range bars don’t at all take time into consideration and therefore, there isn’t such a concept as timeframe.

For the previous chart types, the timeframe was important as the price moves were measured in a set period if time; and each unit was equal to a certain minimum value on time scale that couldn’t be less than a set timeframe. For the Range bars, the concept of timeframe is completely eliminated and a new bar emerges when the price reaches a certain value, set by the user.

Obviously, it considerably reduces the market noise, created by the high price volatility in time; but I’m going to find out how helpful this price chart is in fact and how to apply range bars to the cryptocurrency analysis.

First, let’s see how the Range bars are built.

How Range bars are constructed

It looks like a common chart with bars and has a similar structure:

I marked the parts of the bar with the arrows in the chart above:

  • Extremes are marked with blue arrows.
  • Open levels are marked with red arrows.
  • Body is marked with the green arrow.
  • Close levels are marked with yellow arrows.

The main difference of range bars from the common ones is that the high of a bullish bar or the low of a bearish one will always coincide with the Close point.

The Range bars are measured in an unusual way.

1 Range is measured not in dollars or bitcoins, but in Range units. All bars are drawn with a set Range interval, so they will always be of equal size.

You can select 1000 Range/ 100 Range / 10 Range / 1 Range

1 Range equals to one minimum price change.

The value is calculated automatically for each trading instrument, but you can easily see it if you open the chart, scaled of 1Range.

The value is the difference between the highest (High) and the lowest (Low) bar value; for the BTC USD pair, it is 0.1 USD.

As the Range bars don’t take the time into consideration, with such a little interval, it looks like a Tick chart.

Range bars’ properties

Because of this feature, you can clearly see the price moves within a minute; and so, you can notice any slightest market changes; I believe it to be a real advantage for any scalper.

In the chart of Bitcoin price above, I marked the price moves during one minute. Each unit corresponds to one minute. The red box is the minute in the falling market. The green ones are the minutes in the rising market.

As you see, they differ in size. It is because Range bars show only the price moves, irrespective of the time.

In the BTC USD chart above, it is clear that the red box consists of 29 bars, the second, green, one -of 59 bars, and the last one- of 23.

Based on this, I can suggest the first property of Range bars. During a certain period of time, when the price reaches its highs, the number of Range bars will reduce.

It is constructed very simply. In the given example, 1 Range equals to 0.1 USD for BTCUSD pair. Therefore, the price up-move for each 0.1 USD will be marked with a new green bar; and each step down by 0.1 USD -with a red bar.

On the scale of 1 Range, everything seems to be simple. There are no high or low points for a bar, as the size of each is equal to the minimum price move.

The chart looks like Renko; but only provided that the Phantom Bars are switched on.

Look at the BTCUSD chart above, it is clear that the bars of 1 Range are far from each other. The matter is that, if you switch the Phantom Bars off, you’ll see only the levels, where there has been real trading; that is, based on the chart above, first, there was met the condition of trading with the minimum interval of 0.1 USD at 6606.0 USD; and, next, somebody put an order at 6617.2 USD, and the price hit that level; it looks like a gap, which means that there were no trades in this interval from 13:29 till 13:31.

The next price move is as high as the level of 6658.4 USD; it means that there is a large buyer, buying the instrument at that price.

In this form, the chart doesn’t look so nice, but is is designed for a different aim. Gaps mean that big traders are interested in the asset, and can be an additional signal for the market participants.

This feature can be applied more efficiently to larger scales, as there are not so many false breaks and it is easier to identify the global trend.

However, because the crypto prices are strongly manipulated and very volatile in the cryptocurrency market, including BTCUSD pair, there are rather many false gaps (I marked them with the red arrows in the chart above).

Indicators in Range chart

When the Phantom Bars are activated, those gaps are filled with the virtual bars. The chart becomes a little longer, but its wave-like structure is clearer.

In the picture above, there is the same chart; but, in the left window, Range chart is without Phantom Bars; and in the right window, it displays Phantom Bars.

It is clear due to the chart extension that the signals, sent by moving averages, are getting less late. Therefore, to analyze the application of indicators to the Range chart, I’ll switch on the Phantom Bars function.

It is clear from BTC USD price chart above that the Range is quite performative with moving averages’ signals and takes part in drawing the graphic analysis patterns.

In addition, you see that the price chart, together with MACD, is also working out divergences and convergences (I marked the bullish convergence with the red lines).

Due to the principle of all-round market view, I’ll try to predict BTCUSD future price for the next few days.

In the chart with the price scale of 10 Range, you can see a series of bearish divergences (marked with the red line). There is a clear support level at 6610; the Bitcoin price can well rebound from the level; however, taking into account that MACD has just entered its bearish phase after a long consolidation, I suggest that the BTCUSD ticker should go up through a sideways trend.

At the price scale of 100 Range in the chart above, you see that the last bar is indicating a reversal at the high of 6628 USD. The moving averages in the chart are indicating a continuous fall, but MACD is indicating a bullish reversal, which can set back the Bitcoin fall in the near future.

In the chart above, there is the largest price scale of 1000 Range. Here, one Range bar equals to 100 USD. Therefore, the above price moves, can be filtered out as the market noise and may not be displayed in the chart. However, this thorough analysis provides deep understanding of the cryptocurrency market processes. You see that these levels provide a good support zone that won’t let the market draw down very deep, and so, in the above 1000 Range chart, I’m confident in the nearest support levels; I marked them with the orange lines in BTC price chart above. One of them is around the Open point (6554 USD), another is at 6534 USD.

I’ll provide the results of this crypto forecast in my next post, devoted to Bitcoin analysis.

As for this training article, it is time to summarize the material.

After a more detailed study of Range chart, I can define the following features:

  1. The price chart is completely independent from time.
  2. You can identify the big traders’ interest by the gaps.
  3. You can apply common tools of technical analysis, like graphic analysis (support-resistance levels, trendline analysis, graphic patterns), indicators, based on moving averages and the signals of convergence/ divergence.
  4. You can watch the development of wave formations and fractal models.

That is all about Range chart for today. In my next educational post, I’ll describe Heikin Ashi charts

Go on following the Bitcoin price and staying informed on the cryptocurrency market. I wish my crytpo price analysis is useful for you!

I wish you good luck and good profits!

 


PS. If you agree with my ideas, write “+” in the comments; if you don’t agree, put “-”. If you liked the post, just write thank you, and don’t forget to share the post. It is easy for you and I will be very pleased :)

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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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