Impact of Range Bar and Ergodic Process on Early Price Trend Detection Using Evidence From USD/CNY Currency

Abstract

In this paper, range bars and the ergodic theory are combined to investigate early price movements for the USD/CNY currency pair in China from 2015 till 2019. The main findings suggested that early price trend detection may be accomplished within two standard deviations of the mean. During the duration of trading that was restricted to a narrow range, the sample revealed that at least 68 percent of the frequency mean result indicated that range bars solved price trend creation. This paper is subjected to additional analysis in order to acquire a correlation coefficient sample of at least 0.8. This sample revealed that ergodic theory prevented overpriced hedge trends. The goal of this paper is to improve the detection of price trends at an earlier stage than the methodology of trend tracking. Because of this, the authorities need to seriously consider putting early price trend detection models into place in order to boost the liquidity of the local currency.