NR7 & 50 EMA Trend Scanner
Scans Nifty 500 stocks forming a Narrow Range 7 (NR7) pattern trading above their 50-day EMA.Understanding the NR7 Volatility Contraction Scanner
The NR7 (Narrow Range 7) is a powerful volatility contraction setup popularized by Toby Crabel. It identifies days when a stock's daily trading range (High minus Low) is the narrowest compared to the preceding six sessions (totaling 7 days). This scanner runs across Nifty 500 stocks to alert traders of explosive breakout candidates.
Why the NR7 Pattern is Highly Effective:
- The Volatility Cycle: Markets move in alternating cycles of volatility contraction (quiet consolidation) and volatility expansion (trending moves).
- Extreme Compression: The NR7 represents a state of extreme price compression, acting like a coiled spring. The breakout from this compression is typically sharp and rapid.
- Risk-Reward Ratio: Since the NR7 candle has a very narrow range, the stop-loss (placed at the opposite side of the candle) is small, leading to an exceptional risk-to-reward ratio.
How to Trade NR7 Breakouts:
Traders set buy stop orders slightly above the NR7 candle high and sell stop orders slightly below the NR7 candle low. Once triggered, the stop loss is placed on the opposite side of the NR7 candle. In this scanner, we filter candidates using a 50 EMA baseline to identify whether a stock is in a long-term uptrend (close price > 50 EMA) or downtrend, helping you align with intermediate trend momentum.
Disclaimer: This scanner is for educational and informational purposes only. The NR7 (Narrow Range 7) indicators are calculated mathematically based on historical data. These signals do not constitute financial advice, buy/sell recommendations, or investment calls. Backtest results do not guarantee future performance. Stock trading is subject to high market risks; please consult a SEBI-registered financial advisor before making any trading decisions.