Elearnmarkets - Financial Market Learning
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Learn On Elearnmarkets
Elearnmarkets - Learn Stock Market, trading, investing for Free
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Learn On Elearnmarkets
Elearnmarkets - Learn Stock Market, trading, investing for Free
No Result
View All Result
Home Technical Analysis
778_ELM_Blog Image (5)

NR4 and NR7 Trading Strategy Setup

Elearnmarkets by Elearnmarkets
January 20, 2022
in Technical Analysis, Charts, Patterns & Indicators
Reading Time: 6 mins read
11
75k
VIEWS
Share on FacebookShare on TwitterShare on WhatsApp

Bengali: এই ব্লগটি এখানে বাংলায় পড়ুন।

Narrow Range 4 and Narrow Range 7 help to find the calm so that we can prepare and profit from the impending storm. Market goes through regular contraction and expansion cycle.

“The quiet period before the next explosive market move is like the calm before the storm”

In this trade setup, you should wait patiently for market in order to enter in contraction which means for range of the bars to reduce. Once we spot NR4 or NR7, a bigger price movement and direction is expected. It is a breakout and reversal pattern which helps to generate profit after a range.

Table of Contents
NR4 and NR7 Trading Strategy
How to find NR7 day?
How to find NR4 day?
NR4 and NR7 Trading Example
Key Takeaways

In this blog, let us discuss what does Narrow Range 4 and Narrow Range 7 mean and how to trade with them:

NR4 and NR7 Trading Strategy

Narrow Range Trading Strategy is a breakout based method that assumes that the price of the security trends up or down after a consolidation in a narrow range.

Join TMP Join TMP Join TMP

For NR7 the default period is 7 days which means that if the price range of any particular days is lowest as compared to last 7 days then that day is NR 7 day.Similarly, For NR4 the default period is 4 days which means that if the price range of any particular days is lowest as compared to last 4 days then that day is NR 4 day.

The range is calculated as the difference between High and Low of the particular day.The day after the NR 7 or NR 4 day acts as the confirming day on where the price will move further. If the breakout happens at the high of NR 7 candle then indicates bullishness where as If the breakout happens at the low of NR 4 candle then indicates bearishness.

The philosophy behind this pattern is same as the Bollinger Band Squeeze, a volatility contraction followed by a volatility expansion.

nr4 and nr7 trading strategy

How to find NR7 day?

Following are steps to identify NR7 day:

  1. Get the high and low data of last few days
  2. Calculate the range for every day (high-low)
  3. Compare the range of today and previous 6 days range.
  4. If today’s range is the smallest of all the 7 days then it is NR 7 day else not.

The NR 7 day can be seen from the chart below:

NR4 and NR7 Trading Strategy Setup 1

How to find NR4 day?

Following are steps to identify NR4 day:

  1. Get the high and low data of last few days
  2. Calculate the range for every day (high-low)
  3. Compare the range of today and previous 3 days range.
  4. If today’s range is the smallest of all the 4 days then it is NR 4 day else not.

Learn from Market Experts:- Technical Trading Made Easy

The NR 4 day can be seen from the chart below:

nr4 day

NR4 and NR7 Trading Example

The trading example shows Reliance with 4 signal signs in less than 2 months. We have also used Average True Range indicator which shows the range of the candles. We can see at the NR4 and NR 7 candle the ATR has decreased which means that the range of the candle is the lowest in the last 4 or 7 days.

A next day move above the high is bullish whereas below the low is bearish. One can notice that NR 4 is formed back to back on three different occasions. The first NR 4 gave bearish signal and we can see that the next day there is gap down opening which confirms the signal. Next NR 4 signal is a bullish reversal signal which is confirmed by the volume and also bullish candle on the next day.

We can see back to back NR 4 candle that generated a bearish candlestick pattern. One should sell when the price crosses at the low of NR 4 candle or may incur loss if the signal does not work out. At this candle we can also see that ATR has declined.

Finally we can notice NR 7 giving bearish breakout, confirmed by the volume and next day candle.

trading example

Narrow Range 4 and Narrow Range 7 give you a chance to be ahead of trade follower/indicator who can jump in the trend after you. One of the easiest ways to trade this setup is to go long above the Day’s high of NR7 or NR4 with a stop of the at the day’s low of the same.

Also Read: How to filter stock for Intraday Trading?

You can go short below the Day’s low of NR7 or NR4 with a stop at the day’s high of NR7 or NR4 day.This pattern gives a trader a distinct edge to trade at least next 2-3 days. In many situations, NR 7 breakout is found near the beginning of new wave.

Key Takeaways

  • For NR7 the default period is 7 days, if the price range of any particular days is lowest as compared to last 7 days then that day is NR 7 day.
  • For NR4 the default period is 4 days, if the price range of any particular days is lowest as compared to last 4 days then that day is NR 4 day.
  • One should buy only when previous candle is NR7 candle, and current candle has a Gap-Up opening.
  • One should sell only when previous candle is NR7 candle, and current candle has a Gap-Down opening.
  • Preferred timeframe for this setup is daily.

In order to get the latest updates about Financial Markets visit https://stockedge.com/

Tags: advancedBreakout PatternsenglishNarrow RangeNR4NR7
Share4TweetSend
Previous Post

Investing with Rs. 500: Learn the top 5 ways of doing it

Next Post

Bank Identification Number (Bin Codes) – A Comprehensive Guide

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

Technical Analysis in Stock Trading 2
Technical Analysis

Technical Analysis in Stock Trading

May 31, 2023
5.7k
The Ultimate guide to Trading Divergences 3
Technical Analysis

The Ultimate guide to Trading Divergences

May 26, 2023
911
Trading Psychology: Guide to Master Your Mind in 5 Steps 4
Technical Analysis

Trading Psychology: Guide to Master Your Mind in 5 Steps

May 24, 2023
2.9k
Trading Psychology: 7 Keys to Successful Trading 5
Technical Analysis

Trading Psychology: 7 Keys to Successful Trading

May 22, 2023
2.9k

Comments 11

  1. anand says:
    4 years ago

    in the chart shown above of reliance industries the NR4/NR7 strategy does not match with “key takeaway” points 3 and 4

    Reply
    • Sakshi Agarwal says:
      4 years ago

      Hi Anand,

      This is just one of the technical strategies which you can use on the charts.

      Thank you for Reading!

      Keep Reading!

      Reply
  2. Raman says:
    3 years ago

    When you say gap up or gap down. How much in term of percentage one should consider minimum for the same.

    Reply
    • Sakshi Agarwal says:
      3 years ago

      Hi,

      Gaps are areas on a chart where the price of a stock (or another financial instrument) moves sharply up or down, with little or no trading in between. As a result, the asset’s chart shows a gap in the normal price pattern. There is no fixed percentage for it.

      Thank you for reading!!

      Reply
  3. Dhevins vini says:
    2 years ago

    i appreciate your work. thank you.

    Reply
    • Sakshi Agarwal says:
      2 years ago

      Hi,

      Thank you for Reading!

      Keep Reading!

      Reply
  4. Jnbarman says:
    2 years ago

    Very good strategy 👍

    Reply
    • Sakshi Agarwal says:
      2 years ago

      Hi,

      We are glad that you liked our post.

      Thank you for Reading!

      Reply
  5. Renjith R says:
    2 years ago

    good one

    Reply
    • Sakshi Agarwal says:
      2 years ago

      Hi,

      We really appreciated that you liked our blog.

      Keep Reading!

      Reply
  6. Anjali Ajay Pathak says:
    4 weeks ago

    Great Topic & Nice Strategy to enter before a rally
    Thanks to Elearnmarkets Team

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Follow Us

Facebook-f Twitter Instagram Linkedin-in Youtube Telegram

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

Download App

Categories

  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Technical Analysis
  • Marketshala
  • Miscellaneous

Popular On Elearnmarkets

  • Market Superheroes:
  • Vivek Bajaj
  • Chetan Panchamia
  • Ashish Kyal
  • Premal Parekh
  • Abhijit Paul
  • Jegan
  • Sivakumar Jayachadran
  • Vishal Malkan
  • Jyoti Budhia
  • Vivek Gadodia
  • Vishal Mehta
  • Piyush Chaudhry
  • Santosh Pasi
  • Gomathi Shankar
  • Market Superheroes:
  • Vivek Bajaj
  • Chetan Panchamia
  • Ashish Kyal
  • Premal Parekh
  • Abhijit Paul
  • Jegan
  • Sivakumar Jayachadran
  • Vishal Malkan
  • Jyoti Budhia
  • Vivek Gadodia
  • Vishal Mehta
  • Piyush Chaudhry
  • Santosh Pasi
  • Gomathi Shankar
  • Courses:​
  • Options Trading
  • Dow Theory
  • Momentum Trading
  • Stock Investing
  • Stock Market for Beginners
  • Harmonic Chart Patterns
  • Algo Trading
  • Elliot Wave Theory
  • Advanced Excel
  • Cryptocurrency
  • NSE Certification Course
  • Courses:​
  • Options Trading
  • Dow Theory
  • Momentum Trading
  • Stock Investing
  • Stock Market for Beginners
  • Harmonic Chart Patterns
  • Algo Trading
  • Elliot Wave Theory
  • Advanced Excel
  • Cryptocurrency
  • NSE Certification Course
  • Webinars:
  • Bank Nifty Scalping
  • Intraday Trading Strategies
  • Options Trading Strategies
  • Options selling
  • Price Action
  • Relative Strength
  • Tax Planning
  • Options Buying
  • Growth Stocks
  • Portfolio Management
  • Relative Strength Index
  • Risk Management
  • Renko Charts
  • Crude Oil
  • Traders Psychology
  • Moving Average
  • Multibagger Stocks
  • Webinars:
  • Bank Nifty Scalping
  • Intraday Trading Strategies
  • Options Trading Strategies
  • Options selling
  • Price Action
  • Relative Strength
  • Tax Planning
  • Options Buying
  • Growth Stocks
  • Portfolio Management
  • Relative Strength Index
  • Risk Management
  • Renko Charts
  • Crude Oil
  • Traders Psychology
  • Moving Average
  • Multibagger Stocks
  • Free Learning Modules:
  • Intraday Trading
  • Options Scalping
  • Swing Trading
  • Financial Modelling
  • RSI Indicator
  • Bollinger Bands
  • Pricing of Futures
  • Personal Finance
  • Initial Public Offerings (IPO)
  • Value Investing
  • Technical Indicators
  • Candlesticks
  • Chart Patterns
  • Option Greeks
  • ELSS Funds
  • Banking and Insurance
  • Real Estate
  • Gold
  • Free Learning Modules:
  • Intraday Trading
  • Options Scalping
  • Swing Trading
  • Financial Modelling
  • RSI Indicator
  • Bollinger Bands
  • Pricing of Futures
  • Personal Finance
  • Initial Public Offerings (IPO)
  • Value Investing
  • Technical Indicators
  • Candlesticks
  • Chart Patterns
  • Option Greeks
  • ELSS Funds
  • Banking and Insurance
  • Real Estate
  • Gold
  • Book Summaries:
  • Rich Dad Poor Dad
  • Psychology of Money
  • The Intelligent Investor
  • The Richest Man in Babylon
  • Think and Trade Like a Champion
  • Value Investing and Behavioural Finance
  • Trading in the Zone
  • Learn to Earn
  • Book Summaries:
  • Rich Dad Poor Dad
  • Psychology of Money
  • The Intelligent Investor
  • The Richest Man in Babylon
  • Think and Trade Like a Champion
  • Value Investing and Behavioural Finance
  • Trading in the Zone
  • Learn to Earn
  • Tools:
  • CAGR Calculator
  • SIP Calculator
  • eLearnOptions
  • Future Value Calculator
  • Present Value Calculator
  • Atal Pension Yojana
  • Cost of Delay Calculator
  • Become a Crorepati
  • Tools:
  • CAGR Calculator
  • SIP Calculator
  • eLearnOptions
  • Future Value Calculator
  • Present Value Calculator
  • Atal Pension Yojana
  • Cost of Delay Calculator
  • Become a Crorepati

© 2023 Elearnmarkets. All Rights Reserved

  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling
  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

Get Elearnmarkets App

No Result
View All Result
  • Article Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • Hindi
    • Bengali
    • English
  • Courses
  • Webinars

© 2020 Elearnmarkets All Rights Reserved