QV ATR Active Range Values

QuantVault

### Description for Presentation

The "QV ATR Active Range Values" indicator is a forward-looking tool designed for traders to estimate potential price ranges over 1, 2, or 3 months based on historical volatility and momentum. It leverages the Average True Range (ATR) to measure volatility and incorporates a "win rate" derived from recent candle colors to bias projections toward upside or downside potential. This creates asymmetric range forecasts that reflect market directionality, helping users anticipate breakout levels, set targets, or manage risk. The indicator overlays projected high/low lines on the chart and displays a compact table summarizing days to key percentage targets (e.g., +30% or -20%) alongside projected prices and percentage changes. Ideal for swing traders or investors seeking data-driven price projections without relying on complex models.

### Detailed Explanation of How It Works

This indicator uses Pine Script v5 on TradingView to compute and visualize price projections. Below, I'll break it down step by step, including the key calculations, logic, and outputs. Note that it assumes a trading month has 21 days (a common approximation for business days), and all projections are based on daily timeframes derived from weekly data.

#### 1. **User Inputs**
- **ATR Length (Lookback)**: Default 25. This is the period used to calculate the ATR and count candle colors.
- **Show Projections**: Boolean toggles to display 1-month (yellow), 2-month (orange), or 3-month (green/red) lines. By default, only 1-month is shown.

#### 2. **Period Definitions**
- Months are converted to days assuming 21 trading days per month:
- 1 month: 21 days
- 2 months: 42 days
- 3 months: 63 days
- These periods represent the forward-looking horizons for projections.

#### 3. **Volatility Calculation (ATR)**
- **Weekly ATR**: Fetched using `request.security` on the weekly timeframe with the specified ATR length (e.g., average true range over the last 25 weeks).
- **Daily ATR**: Derived by dividing the weekly ATR by 5 (approximating 5 trading days per week). This scales volatility to a daily basis.
- **Base Projections**: For each period, multiply daily ATR by the number of days in that period. This estimates the total expected range if volatility persists:
- 3 months: `daily_atr * 63`
- 2 months: `daily_atr * 42`
- 1 month: `daily_atr * 21`

#### 4. **Momentum Bias (Win Rate)**
- Counts the number of "green" (close > open, bullish) and "red" (close < open, bearish) candles over the ATR lookback period.
- **Win Rate**: Fraction of green candles out of total colored candles (green + red). Defaults to 0.5 (50%) if no colored candles exist.
- This win rate introduces asymmetry: In bullish periods (high win rate), upside projections are larger; in bearish periods (low win rate), downside projections dominate.

#### 5. **Adjusted Projections**
- **Upside Projection**: Base projection multiplied by win rate (e.g., for 3 months: `base_projection_3 * win_rate`).
- **Downside Projection**: Base projection multiplied by (1 - win rate).
- **Projected Prices**:
- High: Current close + upside projection
- Low: Current close - downside projection
- This creates realistic, direction-biased ranges rather than symmetric ones.

#### 6. **Chart Overlays (Plots)**
- Lines are plotted only if the corresponding toggle is enabled, with 50% transparency for a dimmed effect:
- 3-month high: Solid green line
- 3-month low: Solid red line
- 2-month high/low: Dashed orange lines
- 1-month high/low: Dashed yellow lines (#f6e122)
- These lines extend horizontally from the current bar, visualizing potential future highs/lows.

#### 7. **Daily Rates and Days to Targets**
- **Up Rate**: `daily_atr * win_rate` (expected daily upward movement).
- **Down Rate**: `daily_atr * (1 - win_rate)` (expected daily downward movement).
- **Days to Targets**: Calculates approximate trading days to reach fixed percentage moves from the current close, using the rates:
- +30%: `(close * 0.30) / up_rate` (rounded)
- +20%: `(close * 0.20) / up_rate`
- +10%: `(close * 0.10) / up_rate`
- -10%: `(close * 0.10) / down_rate`
- -20%: `(close * 0.20) / down_rate`
- -30%: `(close * 0.30) / down_rate`
- If a rate is zero, days are set to `na` (not applicable).

#### 8. **Table Display**
- A single combined table is created at the top-center of the chart with a semi-transparent black background (80% opacity) and white borders.
- **Structure** (6 columns x 7 rows):
- **Left Section (Days to Targets, Columns 0-1)**:
- Lists percentage targets (+30% to -30%) with corresponding days, colored green for upside and red for downside.
- **Separation (Column 2)**: Empty for visual spacing.
- **Right Section (Projections, Columns 3-5)**:
- Shows 1M/2M/3M highs and lows with:
- Projected price (formatted to 2 decimals).
- Percentage change from close (e.g., `((projected_high - close) / close) * 100`).
- Colors match the plot lines: Yellow for 1M, orange for 2M, green for 3M high, red for 3M low.
- The table updates dynamically with each bar, providing at-a-glance insights.

#### Key Assumptions and Limitations
- **Volatility Persistence**: Assumes future ATR matches historical levels; actual volatility can fluctuate.
- **Linear Projection**: Treats price movement as additive daily increments, ignoring compounding or non-linear effects.
- **Candle Count**: Only considers colored candles (ignores doji where open = close), and uses a simple win rate without weighting by size.
- **Timeframe**: Best on daily charts; weekly ATR scaling assumes consistent weekly-to-daily ratios.
- **No Backtesting**: This is a visualization tool, not a strategy with entry/exit signals. Test projections against historical data for accuracy.

This indicator combines volatility forecasting with basic sentiment analysis for practical, visual projections. If you're presenting it, emphasize how the win rate adds a directional edge over plain ATR-based ranges, making it more adaptive to trending markets. If you need modifications or examples on specific tickers, let me know!