Constructing directional movement from bar range

Start with the day-type test

Editorial view: treat a directional-index filter as a construction problem first. Every bar is forced through a candlestick day-type test so the market’s outside excursion becomes one signed increment, or none, before any smoothing is allowed to describe trend strength.

The archive workflow defines daily directional movement as the larger portion of the current bar that lies outside the prior bar’s range. That portion is signed plus or minus.

Assigning a plus increment

A plus increment requires a higher high. On an outside bar the high-side excess must also exceed the low-side excess, and a limit bar uses that same high-side excess.

An outside-up assignment needs a higher high, a lower low, and a larger high-side excess. Failing any of those tests withholds the plus increment.

Copying the tests for a minus increment

A minus increment reverses the up-bar tests: a lower low supplies the increment, and an outside down bar must have a larger low-side excess than high-side excess.

Plus and minus tests are symmetric, so the down-bar rules can be obtained by copying and editing the up-bar tests instead of writing a second construction.

When the increment is withheld

An inside bar contributes no directional increment. An outside bar whose high-side and low-side excesses are equal also contributes none.

Range geometry, not the close

Because the increment is taken from range geometry rather than the close, a bar can receive a plus increment even when it finishes lower.

What must be assembled together

True range and the daily plus and minus increments are the two components that must be assembled and checked together before later directional-index steps.

Walk through every day type

Rare candlestick day types can be absent for a long stretch of a one-sided trend, so every case needs a paper walkthrough or a construction error may stay hidden until that bar appears.