Using Price Range to Gauge Intraday Performance

Last Updated on 15/05/2023 by Ndanileka

LIMITATION OF THE DAILY PRICE RETURN

When analyzing the intraday performance of a stock, it’s essential to have a comprehensive understanding of how the price is performing throughout the trading day. Traders often rely on the current price relative to the previous close, also known as the “current daily return,” as a quick reference point to gauge the stock’s performance.

While the current daily return provides a general indication of whether the stock is up or down from the previous day’s close, it fails to provide context into how the price is performing in relation to its high and low throughout the day. This can be problematic as it can lead to an incomplete or inaccurate analysis of the stock’s intraday performance.

For instance, consider a scenario where a stock has a positive gap open, reaches a daily high, and then trades near the daily low but still ends up above the previous day’s close. In this case, the current daily return would indicate that the stock has generated a positive return from the previous day’s close, which may suggest a good performance. However, relying solely on this metric can be insufficient to fully evaluate the stock’s intraday performance in relation to its price range.

Intraday price chart illustration, where the price trades near the daily low but above the previous close.
Intraday price chart illustration, where the price trades near the daily low but above the previous close.
CURRENT PRICE RELATIVE TO DAILY TRUE RANGE

As an additional indicator, traders can use the position of the current price in relation to its high and low to monitor intraday price performance.

The current price relative to the daily true range is calculated by;
Subtracting the True Low (the minimum value between yesterday’s close and today’s low) from the Current Price and then dividing the result by the Daily True Range.
The resulting percentage value indicates how close the current price is to the daily high.

For example, let’s say that the current price of a stock is 50, the True Low is 48, and the Daily True Range is 4.

Using the formula:

((Current Price – True Low) / Daily True Range) x 100 = Current Price Relative to Daily True Range

We can calculate the Current Price Relative to Daily True Range as follows:

((50 – 48) x 100) / 4 = 50%

So in this example, the Current Price is Relative to Daily True Range at 50%, which means that the current price is halfway between the True Low and the High for the day.

The Daily Range (DR) is determined by calculating the difference between the highest and lowest price of a stock over a trading day. However, to account for price gaps that may occur from the previous day’s close, the Daily True Range is used instead. If you’re interested in learning more about DR and DTR calculations, check out our post on stock price ranges.


CURRENT PRICE RELATIVE TO DAILY TRUE RANGE GOOGLE SHEETS FORMULA

In a previous tutorial, we completed the formula for calculating the daily true range.
Therefore in this post, we will complete the formula by combining completed formulas from the previous post.

TUTORIAL

Cell B1 = “ACN” (Accenture Plc)

Step 1. Request three values, Current Price, True Low, and the Daily True Range.

Step 1.1. Current Price request.

=GOOGLEFINANCE(B1,"price")
Current Price Request, Google Sheets Formula
Current Price Request, Google Sheets Formula

Step 1.2. True Low request.

=MIN(GOOGLEFINANCE(B1,"low"),GOOGLEFINANCE(B1,"closeyest"))
True Low Request, Google Sheets Formula
True Low Request, Google Sheets Formula


Step 1.3. Daily True Range request

=MAX(GOOGLEFINANCE(B1,"high"),GOOGLEFINANCE(B1,"closeyest"))-MIN(GOOGLEFINANCE(B1,"low"),GOOGLEFINANCE(B1,"closeyest"))
Daily True Range Request, Google Sheets Formula

Step 2. Input the requested values into the Current Price Relative to Daily True Range formula to complete the calculation.

((Step 1.1 – Step 1.2 ) / Step 1.3) x 100 or format as a percentage.

=(GOOGLEFINANCE(B1,"price")-MIN(GOOGLEFINANCE(B1,"low"),GOOGLEFINANCE(B1,"closeyest")))/(MAX(GOOGLEFINANCE(B1,"high"),GOOGLEFINANCE(B1,"closeyest"))-MIN(GOOGLEFINANCE(B1,"low"),GOOGLEFINANCE(B1,"closeyest")))
Current Price Relative to Daily True Range, Google Sheets Formula
Current Price Relative to Daily True Range, Google Sheets Formula

CURRENT PRICE RELATIVE TO DAILY TRUE RANGE PRICE ANALYSIS

Using the current price relative to the daily true range can be an effective indicator for monitoring the intraday performance of a stock. This indicator can also function as a bearish or bullish signal to keep track of a watchlist and identify where the majority of stocks are trading.
To make it easier to assess the market, I typically group the percentage value derived from the indicator into three categories: below 30% as bearish, above 70% as bullish, and any value in between indicates a flat market. This method allows me to quickly analyze the market, even when I am not actively monitoring it.
It is important to note that the current price relative to the daily range is not a signal on its own but rather a tool that provides context on intraday price performance.
As a trader, it’s a good practice to ask questions and further analyze the information you receive.
For instance, if the price closes on a daily high (100%) or low (0%), what can be expected the following day? While the answer may not always be as expected, the process of questioning and analyzing can enhance your understanding of short-term price dynamics.

SPREADSHEET

The spreadsheet below monitors the Current Daily Return and Current Price Relative to Daily True Range of stock listed on the S&P100. A complete list of spreadsheets can be found here.


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