Range Projector

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Range Projector

The Range Projector tool takes the momentum, acceleration and other ratio models to plot a Range Projector bar. This bar defines a projection zone in which the next swing reversal is statistically likely to occur, i.e. the projection identifies the location of major resistance for the current rally. The bar displays both the price level and time frame in which the reversal can be expected occur.

Your SOFTWARE uses previous turning point levels and swing ranges to calculates the Range Projector Bar.

The Range Projector tool can be used in conjunction with the Elliott Wave Hi-Lite. Although they are calculated differently, the Range Projector bar can be expected to be plotted in the same area as the Elliott Wave's TAPP region, see the discussion below.

Set Range Projector

To plot a Range Projector Bar, two user inputs are required: select a starting point, and designating the formation as long or short.

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Select Starting Point

In order for the calculations to be most effective, the user must select an interval in which a reversal occurs, and ideally this will be a major reversal.

The user selects the Range Projector's base interval start point using the cursor. When the interval is selected, a blue circle will identify the starting point interval from which the Range Projector is calculated.

Set Long or Short

The user must also set the display for long or short price movements. If the overall trend is long, move the cursor above the level of the Start Point and single left mouse click.

To display the Range Projector bar for a short price formation, move the cursor below the start point price level of the Start Point and single left mouse click.

The cursor will change to indicate which direction is being set:

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Cursor Up (Long)

Cursor Down (Short)

    In both cases, the Range Projector bar will be recalculated and displayed in the appropriate position automatically.

The Average Price Target level of the Range Projector bar is displayed immediately to its left.

The Range Projector bar can be extended to the right by selecting the check-box in the Range Projector Settings dialog box, see Display Settings, below.

Note - The starting point selection and trend direction settings are critical to the proper functioning of this tool, particularly when it is used in conjunction with the Elliott Wave Hi-Lite.

Range Projector Calculation

Once the start point and direction are set by the user, Your SOFTWARE uses all available data to perform the calculation.

As mentioned previously, Your SOFTWARE will determine the highest swing compression and swing period settings at which sufficient data exists to perform the calculation.

As soon as the calculation is performed, the results are plotted on the price chart.

Users can view the compression level and swing periods used in the calculation in the Range Projection Settings dialog box:

drawtool_rngprjctngensets.png

Swing Compression and Swing Periods

Your SOFTWARE automatically selects the correct range of data over which to apply the calculations. The software begins its initial analysis with using Weekly Swing Compression with a 4 week Swing Period. At this level the greatest range of data will be utilized in the calculation, and the most accurate result can be expected.

It is recommended that at least 5 years of historical data be available for each security to be analyzed.

If insufficient data is found, Your SOFTWARE will automatically reduce the weekly swing periods and then change the compression to Daily and sequentially lower the daily swing periods from four to one until it reaches a level with sufficient data to complete the calculation.

The level at which the calculation takes place will be indicated in the Swing Compression and Swing Periods text boxes.

User Entry

After Your SOFTWARE has automatically displayed the settings that it used in its calculation, users can manually alter the Swing Compression or Swing Period levels using the drop-down menus.

Swing Compression can be lowered from Weekly to Daily, and the Swing Periods for both weekly or daily swings can be 1, 2, 3 or 4.

If a number other than 1, 2, 3 or 4 is entered, the Value out of bounds! error message will appear.

Click OK to apply the new settings, the position and size of the Range Projector Bar will alter based on the new calculation.

Note - It is not recommended to manually increase the levels of compression or swing periods, for example to change from Daily to Weekly, or from a 1 Weekly Swing Period to a 3 Weekly Swing Period.

This is because Your SOFTWARE has already analyzed the available data and concluded that insufficient data is available to make a meaningful calculation at those levels.

Selecting settings at lower levels will result in a valid calculation but the amount of data used will be less, hence the accuracy of the Range Projector may be affected.

Minimum Swings

The number of swings used to analyze the available data and calculate the Range Projector Bar can be varied.

The Minimum Swings setting controls the analysis of available data, and hence the swing compression and period settings.

The number set is the minimum number of swings (at the compression and period setting) required to be present in the data for the calculation to be performed.

If the minimum number of swings at those compression and period settings is not detected, Your SOFTWARE will progressively lower the swing period, and then the swing compression, until it arrives at a level at which the minimum number of swings is detected in the available data.

The default Minimum Swings setting is 5.

Users can change the setting, and save it as the new Default.

Maximum Swings

The Maximum Swings setting affects the calculation of the data at the level determined by the Minimum Swings setting.

The data used in the calculation will be determined by the compression and period levels established by the Minimum Swings setting. For example, if the first instance of 5 swings in the available data was reached at the 2 Weekly Swing level, the data for the swings that occurred at that level will be used in the calculation.

Maximum Swings sets the maximum number of swings that are used in the Range Projector Bar calculation. This setting will not affect the analysis of the available data, but it will affect the calculation.

In some cases the Maximum Swings setting may be greater than the available data, Your SOFTWARE will perform the calculation using all available data.

The default Maximum Swings setting is 5.

Users can change the setting, and save it as the new Default.

Projection Level

The Projection Level setting affects the display of the Range Projector Bar.

After the calculation has been performed, the price level at which the Projection Level is set is a percentage above (in a long market, below in a short) the turning point at which the Range Projector was applied.

This percentage can be varied to suit the trading style of individual users.

Select between Conservative, Moderate and Aggressive.

The default setting is Conservative.

The following percentages apply to each setting, and the percentage of waves that have exceeded the indicated levels are also shown:

Projection Level Setting

Percentage of Range

Percentage reaching the level*

Conservative

45%

66%

Moderate

75%

50%

Aggressive

100%

41%

The Range referred to in the table is the price as calculated by the software, then added to the turning point in a long market, and subtracted from the turning point in a short market.

"Aggressive" represents the full range (100%), the two other settings (75% and 45%) are fractions of the full price range, each of which will progressively include a greater number of  positive results.

* This figure represents percentage of wave counts that have breached the Projection Levels during exhaustive back testing of a wide range of securities over a 10 year period.

After changing the Projection Level setting, click the Default button to save as the default setting.

For more information, refer to the Default Settings topic.

Range Projector Display

The Range Projector Bar displays both price and duration data.

Average Price Target

The Average Price Target level is displayed on the price chart, immediately to the left of the Range Projector Bar.

The price calculation is made based on the average high-to-high or low-to-low swing ranges for the Maximum Swings (default is 5).

The Average is then multiplied by the Projection Level Settings and added (long) or subtracted (short) to the last turning point used in the calculation.

As mentioned in the previous section. The Projection Level Settings will determine the price that the line is set at depending on the trading style of individual users: Conservative (45%), Moderate (75%) or Aggressive (100%).

rangprojtnbar.gif

Time Period

The length and position of the Range Projector Bar indicates the likely time period during which the price target will be exceeded.

The bar has three vertical markers indicating the earliest point at which the price level will be exceeded (see Shortest Time in graphic above), the statistical mean for exceeding the price level (see Average Time) and the outer limit of expectation (see Longest Time).

The times are based on the average duration of the swings used in the calculations.

Display Settings

Display settings for the Resistance bar is set in the lower portion of the Range Projector Settings dialog box:

drawtool_prstgansqdsplprops.png

Color

The Color of the bar can be selected using a standard color selector dialog box.

Click the down arrow to open the color selector.

Transparency

The Transparency setting is between 1 and 100.

A setting of 1 is completely filled, a setting of 100 is completely transparent.

Extend Right

Select Extend Right to extend the bar to the right margin of the price chart.

Default Settings

User changes to the Swing Compression and Swing Period settings cannot be set and saved as new defaults. These values are reset each time Your SOFTWARE analyses the available data.

All other settings in the Range Projection Settings dialog box may be altered by the user and saved as the new default settings using the Default button.

For more information, refer to the Set Defaults topic.

Interaction with Elliott Wave Display

The Elliott Wave indicator and the Range Projection drawing tool are often used in conjunction to identify levels of major resistance for the current rally/major support for the current decline.

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Wave 4 Buy / Sell

In Elliott Wave 4 Buy or Sell situations, the Range Projector drawing tool can be used to confirm the TAPP region identified by the Elliott Wave Hi-Lite.

Although the method of calculating the Range Projector is completely different from that of the Elliott Wave, the Range Projection level and the TAPP region will often roughly correspond to one another.

This phenomena is due to the fact that both calculations involve an analysis of the swing patterns in the price chart.

The settings for the Range Projection drawing tool in Wave 4 Buy / Sell situations are as follows:

Trade Formation

Range Projection Starting Point

Wave 4 Buy

Click on the Wave 3 High

Wave 4 Sell

Click on the Wave 3 Low

Wave 5 Buy / Sell

In Elliott Wave 5 Buy or Sell situations, TAPP regions are not identified by the Elliott Wave Hi-Lite.

Hence the Range Projection drawing tool becomes the primary means of identifying the levels of major resistance for the current rally or major support for the current decline.

The settings for the Range Projection drawing tool in Wave 4 Buy / Sell situations are as follows:

Trade Formation

Range Projection Starting Point

Wave 5 Buy

Click on the Wave 4 High

Wave 5 Sell

Click on the Wave 4 Low

For more information on the calculations and settings for an Elliott Wave display, refer to the Elliott Wave Hi-Lite's help topic.

Using Turning Point Hi-Lites to Set the Start Point

The simplest way to initiate the Range Projector calculation is to select the Range Projector drawing tool from the Drawing Tools access panel or floating palette, and click on an interval that also contains a turning point.

Turning Points occur when a trend reverses, and can be displayed on price charts using the Turning Point Hi-Lite. Turning points can be primary (monthly), secondary (weekly) or tertiary (daily).

In order to view the turning points used by the Range Projector in its calculation, apply the Range Projector tool and then open its Range Projection Settings dialog box and note its compression and period settings.

Next apply Turning Points to the price chart and then open the Turning Points Properties dialog box and set the Primary display to the Range Projector's compression and period settings. Turn the display of the

For example, for a Range Projection calculated on 2 Week, Weekly Swings, the following settings will display the turning points used to calculate it:

hilit_turnpointsets.png

Likewise, a Swing Overlay indicator can be set to display the swings used to calculate the Range Projector. Again, insert the same swing compression and swing period for the Range Projector into the Swing Overlay Properties dialog box.

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