I'm interested in performing backtests on range charts. However, I'm worried about how back-adjusted data will hold its integrity with range charts (since splits/dividends alter the true range that occurred). Does anyone have any tips or ideas for this?
I'd think a back adjusted chart would be the antithesis of what a range chart would be interested in if your use of the range is on actual price levels. If it's on variance in price then there might be some usefulness but if its on the absolute values of price then back adjusting just creates fake prices the further back you go.
If you are trading on ranges, adjust for splits but not for dividends as the market seems to have a memory for prior price levels but not so much for dividends in between. However, you probably do want to adjust for special dividends and other similar events like spin-offs though.