As you can see in the examples above the range bar chart to the left has smoothed out the price action eliminating most if not all the noise in the entire day. Now look at the time chart price action it is all over the place especially in the after noon hours.
IV. Advantages of Range Bar Charts, Part II
In this Lesson we will continue to give examples of the advantages of Range Bars.
Range Bar Chart advantages:
2. Defining clear support levels.
In the example of the range bar chart on the left we have clearly difined a support level @ 89.25 . Not only have we been given a support level but it has been confirmed at three different points in the price action making this a level of support that can be trusted and have a high probability of success to trade off of.
Notice the time chart to the right, this is the very same price action as the range bar chart to the left but the support is really unclear and you see an undecisive market.
Range Bar Chart advantage:
3. Defining clear resistance levels.
In the example of the range bar chart to the left we have clearly defined a resistance level @ 91.69 and it has again been confirmed and test three times before price action made its desent. As you can see this was a consoildation period notice how less bars were printed on the range bar chart than the time chart? This eliminates a lot of unnecessary noise and confusion. ( The highlighted price action in the range bar chart is the same highlighted price action in the time chart.)
Now lets look at the time chart, the 91.69 resistance level is not represented in the time chart to the right. Now look at the amount of bars printed in the consolidation period that was avoided in the range bar chart, can you see the difference in the noise and confusion?
To conclude this lesson I want to point out how you can use a range bar chart to establish clear support and resistance levels that can be missed using a time chart. Also how in times of consolidation we can avoid confusion and noise using range bar chart.
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