Range Extension

Range Extension(RE): can be divided into ‘buying’ or ‘selling’ RE, depending upon its direction- upward being the buying RE and downward the selling one. RE is the result of OTP volume in the day’s market activity; more the OTP volume in a day, more the RE. Since, not every ‘auction rotation’ may lead to RE; we can restate that- more the OTP volume in each auction rotation, more the multi-periodic RE & more the magnitude of it. Hence, both the magnitude of RE & its periodicity matters to us for the analysis of market conviction. If market keeps on moving in one direction almost whole day, it means there is continuous extension of day's range in almost all Periods. Such kind of market activity leading to a ‘Multi-periodic’ RE is a sign of market conviction. Contrarily, RE of any magnitude if happens in only over one or few periods i.e., ‘Pauci-periodic’ RE, suggest lesser conviction of market participants.

Similarly, No RE also is a sign of poor conviction. Whether No RE occurs on a day with small or larger IB, leads to different day types, hence market conviction depends on interplay between IB & RE as elaborated later. We will discuss later in details regarding various day types.