A bar which has the lowest range of the last 7 bars. I use the strict definition, that is the range must be smaller than all the preceding 6 ranges, not smaller or equal. This is because I want to see that volatility decreases.
Inside Range Bars (IR)
An inside range bar is a bar with a high and low, which is contained in the previous bar. There are three definitions possible, the strict condition which requires a lower high and a higher low, and the wider condition which allows equla bars. I use the definition in between, that the inside bar must at least have a lower high or a higher low than the preceding bar. This definition is better adapted to smaller timeframes and still satisfies the main requirements
-> that the bar is entirely contained in the previous bar thus confirming its value range
-> that volatility is decreasing
Inside Narrow Range Bars (IR4)
An inside bar which is a narrow range bar as well. But as the inside bar already indicates decreasing volatility, I do accept the wider definition for the narrow range condition, that is I include bars that have an equal or smaller range than the preceding 3 bars.
All the definitions are based on decreasing volatility.
I have not found reversal bars to be reliable on its own. However I display them on my charts, and sometimes they have a meaning, in particular
- if they confirm the current larger time frame trend
- if they sit outside Keltner Channels and coincide with a retest of a high or low
- if they sit on the edge of a trading range
The narrow range bars / inside bars indicator is available here:
Pre-open: overnight trading tested S1, bounced off, and then tested again. Right around S1 at the open. The question is if CL will continue is downward move and will reach S2... or if it will pullback to P at 104.45.
AM: decided to label candles starting from 1 at the open.
1: an outside up candle after a 5 tick bear trap. The next R to watch is the 103.90-104 level (R in pre-open trading and a mid-pivot level).
2: test of R.
3: bull trap fakeout and then a pullback, outside candle. Very unusual to have two of these in such a short span.
4: 38% pullback test.
5: pullback is over, re-test of R @ 103.90-104 area.
6: breakout to the upside. 7: IB
I don't straddle IBs, but choose preferred direction. Short here would be a poor choice for several reasons. The pullback happened on a weaker volume. There has been a breakout to the upside. Moreover, the short entry below the IB would be selling into significant support.
On the other hand, the trend is up, there is good support below... and the next significant resistance point is the Pivot @ 104.45.
So long is preferred here.
PS Hey Fat Tails, if you have additional insights, please do share. (And everyone else is obviously welcome too).
The following 2 users say Thank You to Anagami for this post:
- the pivot lines and yesterday's close as S/R levels
- the VWAP as a trendfilter and S/R
- the pivot range and 3-say rolling pivot range as reference levels
- inside and narrow range bars (each of them would have yielded a nice trade)
Went long 3 ticks above S1 at VWAP, not related to IR and NR bars
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).
The following 2 users say Thank You to Fat Tails for this post:
Platform: Sierra Charts, Investor RT, Ninja Trader
Favorite Futures: NQ
Posts: 527 since Sep 2009
Thanks: 586 given,
I trade the inside bar trades (have since last June when I read Jeff's thread). I switched to Sierra Charts at the end of January. It has an inside bar indicator and allows you to set audible alerts (in fact, you can set audible alerts for just about all indicators). Might be worth a look.
My focus is on:
1. Avoid the opening chop.
2. Honor stops
3. Ensure reward > risk on all trades
The following user says Thank You to papa15 for this post: