The Nifty has moved in a very narrow range this week.
In the weekly charts, the Nifty has formed a narrow range bar after a period of six months. The last time such a narrow bar was formed was in July 2003.
What is a Narrow Range Bar?
Narrow Range Bars are bars in which the trading range during the current bar, (i.e. the difference between the highest price - lowest price) is the narrowest for a specified number of bars.
Significance of Narrow Range Bars
When a Narrow Range Bar occurs, one can expect price range expansion (the trading range of the next bar or next few bars will likely be greater than that of the current bar) and a pickup in price volatility (the range of intraday swings is likely to be greater, offering greater price change in each swing).
The current narrow range bar of the Nifty has a high of 1879.00 and a low of 1833.00.
Futures traders can go Long the moment the Nifty trades above 1879.00 with a stoploss of 1833.00. Alternatively go short the moment the Nifty trades below 1833.00 with a stoploss of 1879.00