Classic Geometric Patterns and Narrow Range Setups

Here is my point, most people who test NR pattern think that the trade they want to take is on a break after the NR_X bar. This is not true. you can think of NR_X patterns as a type of oversold for volatility. The more oversold the bigger the bounce.
The reason things work like this is if the markets get calm people fall a sleep on the switch because volatility is too low. This allows periods of much higher volatility than normal to occur. The question is how to you use them as a setup and what do you use as a trigger to predict large range days which produce most of the profits for opening range breakout. This means you don't want to trade NR_X pattern as a entry setup, so I can say alone they don't offer much of an edge . This means my first comment is true. You can't use them as a setup for the breakout on the next bar. This does not mean that they can not be predictive for large range day, because NR_X occurred in the past N days. If you watch free the first two parts of my opening range breakout video on TradersStudio.com you will see why large range days produce the best results for opening range breakout. In part 2 , which requires free registration to watch ,I briefly discuss predicting big range days.
 
My broker CyberTrader asked me if I would be willing to do a webinar on trading. They obviously have access to my account and know the level of trading activity that I do and as a result wanted me to make this presentation.

I have agreed to it and am doing it on November 17 half an hour after the bell. Attendees will be able to hear me speak as well as see my charts streaming out live. They will be able to ask questions and I will give them answers. We are using the same software I use to moderate my virtual trading floor. So in a sense it's almost like we are all in the same room.

If you want a primer on what the class is about then go to the link below and it is a good start. At the top of the lesson is a link you can click to register for the class. It really would be better if people have read that lesson before you go to this class and we can build from there.

http://thestockstalker.com/id13.html

The classes is about identifying and trading range contraction and it is probably one of the things I'm most known for. Feel free to pass that along to any other serious students of this game that you know in that you think could benefit from it. The class probably is not well-suited for people that trade as a hobby.

If you do no subscribe to the principles of range contraction then just move on and go do something you like. This is for people that already trade it and want to go deeper into it with and all its variations.

Good Trading,
Oz
 
If you have registered to the class referenced in the previous post, plese do not forget that it is this Thursday. See ya then.

Oz
 
GM daily chart:

NR7, today's low exceeded yest's by .01 or it would be an NRID7. Today's range of .49 makes

Consistent with consolidation/contraction/indecision volume has tapered. Be sure to check the hourly volume pattern, too.

The 20 week sma is in play at 24.29 and the price has closed nearly equidistant above and below this number yesterday and today.

Typically, the BoD for GM announces its dividend decision the first few days of the month, with the ex-date about 10 days later.

Be careful.
 

Attachments

Again on GM... the 60 minute chart at this point is going to print a very narrow range. Obviously, a generous move has occurred already - but at least being aware of a narrow range setup puts you in position for a profit opportunity.

Be careful.
 

Attachments

You must log in or register to reply here.
Back
Top