Rav's Office, page-1474

I don't know exactly mel.....

David Weis mentioned them in his last book.

The idea comes from a futures trader Tony Crabbel, in his book - Day Trading with Short Term Price Patterns & Opening Range Breakout - 1990,
In it he discusses both the NR4 (Narrow Range 4) and NR7 (Narrow Range 7) patterns which are quite popular with short-term traders.

Remember - spread or range is a general proxy for volatility.

The general philosophy behind the NR4 and NR7 patterns are similar to the Bollinger Band Squeeze - where a spread or range (volatility) contraction is often followed by a spread or range (volatility) expansion.

Narrow range days sometimes mark price contractions that often precede price expansions, and I have taken them a little further and combined them only with higher than average volume. I did this because spread or range is also a general proxy for volume (eg- a wide spread generally=high volume, average spread=average volume, narrow spread-low volume), so if there is above average volume on a NR7 bar, it means there is an anomaly of some kind compared to what would generally be expected. And when I see a price and volume anomaly, it usually 'means' something , so I sit up and take notice.

I have noticed that narrow ranges like this sometimes (often ??) mark a high or low pivot, and although it can be either a high or a low at any point in time, generally if a high volume NR7 comes in on an upwave, and after a reasonable rise in price, it generally indicates a pull back is near. And the opposite, on a decent down wave, after a reasonable fall in price, a NR7 on decent volume suggests a turn of some sort maybe near.
VSA also suggests something similar, a narrow spread, above average upbar, after a decent rise in price, suggests supply coming in (selling). And a narrow spread, above average volume downbar, after a decent fall in price, suggests demand or support (buying).

So I thought I would include it in my project as an experiment to see if it was helpful or not.

cheers