DR/IDR Candles [LuxAlgo]

This indicator displays defining ranges (DR) and implied defining ranges (IDR) constructed from two user set sessions (RDR/ODR) as graphical candles on the chart. The script introduces additional graphical elements to the original DR/IDR concept and as such can be thought as a graphical method in addition to a technical indicator.

Additionally, this script can display various Fibonacci retracements from the constructed DR/IDR if enabled within the settings.

Settings

• Regular Session: Enable/disable regular session's DR/IDR alongside setting the session time. By default, 09:30 - 10:30 am.
  
• Overnight Session: Enable/disable overnight session's DR/IDR alongside setting the session time. By default, 03:00 - 04:00 am.
  
• UTC Offset: UTC offset for the time zone, by default -5 (EST)
  

Retracements

• Reverse: Inverts source range upper/lower value for constructing the retracements.
  
• From: Source range used to construct the retracements, by default DR is used.
  

By default, the 0.5 retracement (average line) is displayed.

Usage

The used sessions are highlighted by a gray background. DRs are highlighted by dashed lines while IDRs are highlighted by solid ones. The maximum/minimum price between each user set session is highlighted by solid wicks.

The color of the DRs/IDRs/wicks are determined by the price position relative to the DR; if price is above the DR maximum, then a blue color is used. If price is below, then an orange color is used, and if price is within the DR range, then a gray color is used.

Additionally, the area of the DR range is used to highlight the number of time price is located within the DR, with a longer background highlighting a higher number of occurrences. This can help highlight if the DR levels were potentially useful as support/resistance.

When price is outside the IDR range, the area between the price and IDR is highlighted, in blue if price is above the IDR, and orange if it is under.

The original author of the DR/IDR concept describes 3 rules using the price position relative to the DR/IDR levels:

• 1.) If price on the 5-minute timeframe closes above the DR high after 10:30 AM or 04:00 AM then the DR low will likely be the low of the trading session.
  
• 2.) If price on the 5-minute timeframe closes below the DR low after 10:30 AM or 04:00 AM then the DR high will likely be the high of the trading session.
  
• 3.) If price closes above the IDR high after 10:30 AM or 04:00 AM it is an early indication that the low of the DR will be the low of the day and vice versa.
  

We can see that the above rules are cases of conditional probabilities.

There is no significant data supporting or regarding any statistical probability of the above rules to be true, which are more than uncertain given the stochastic nature of prices. The lack of precision of these rules is also a concern (time zone dependance, applicable markets, etc...).

Credits

Credits to trader TheMas7er who originally created the DR/IDR concept in November of 2022. This script was derived from his proposed session times & rules for trading.

Versionsinformation:

- Added settings for IDR area colors
- Minor changes

Versionsinformation:

Fixed an error causing the indicator to not work when using positive time zones.