Trading Narrow Range Bars (NRB) - Oliver Velez
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Definition :
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A narrow range bar is defined as a bar with a smaller than normal range between the high and the low. The appearance of an NRB indicates that a dramatic decrease in volatility has occurred, and strong moves tend to emerge from these periods of low volatility.
Interpretation :
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The presence of an NRB signifies that buyers and sellers are near equal in power.
An NRB is only significant when it occurs after several normal to wide range bars.
An NRB offers the master trader one of the clearest possible signs that a strong turn is close at hand.
A turn (rebound or decline) after an NRB will tend to be more potent and reliable than a turn from a more normal size bar.
When an NRB occurs after a several bar decline, the master trader looks for the stock to turn to the upside.
When an NRB occurs after a several bar advance, the master trader looks for the stock to turn to the downside.
How to play the NRB :
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The master trader looks to buy above the high of an NRB after a several bar drop.
The master trader looks to sell below the low of an NRB after a several bar advance.
The aggressive master trader often buys on an NRB following a several bar decline, if the closing is above the open.
The aggressive master trader often sells short on NRB following a several bar advance, if it is closing below the open.
---------------------------------------------
Definition :
----------
A narrow range bar is defined as a bar with a smaller than normal range between the high and the low. The appearance of an NRB indicates that a dramatic decrease in volatility has occurred, and strong moves tend to emerge from these periods of low volatility.
Interpretation :
--------------
The presence of an NRB signifies that buyers and sellers are near equal in power.
An NRB is only significant when it occurs after several normal to wide range bars.
An NRB offers the master trader one of the clearest possible signs that a strong turn is close at hand.
A turn (rebound or decline) after an NRB will tend to be more potent and reliable than a turn from a more normal size bar.
When an NRB occurs after a several bar decline, the master trader looks for the stock to turn to the upside.
When an NRB occurs after a several bar advance, the master trader looks for the stock to turn to the downside.
How to play the NRB :
---------------------
The master trader looks to buy above the high of an NRB after a several bar drop.
The master trader looks to sell below the low of an NRB after a several bar advance.
The aggressive master trader often buys on an NRB following a several bar decline, if the closing is above the open.
The aggressive master trader often sells short on NRB following a several bar advance, if it is closing below the open.