This NR7 trading strategy is a price action trading strategy much similar to the NR4 trading strategy. In here you will learn about the NR7 pattern and how to trade it.
This is is a price action trading strategy that requires no indicators. All you need is your eyes.
What timeframes are required for this forex system?: Daily Timeframe
What currency pairs can be traded with the NR7 forex trading strategy? All
What Is The NR7 Pattern?
What is the NR7 pattern?
The NR7 pattern is the narrowest range bar (or candlestick) in 7 days. The NR7 pattern is made of of 7 bars. The 7 bar will have a range that is much smaller than the previous six candlesticks.
A range is defined as the difference between the high price and the low price.
What Is The NR7 Day?
What is the NR7 day? Well, the NR7 day is the 7th day with the candlestick with the narrowest range.
The NR7 day is part of the NR7 pattern.
The candlestick or bar that forms in the NR7 day is called the NR7 bar or candlestick.
How To Identify the NR7 Pattern
the NR7 pattern is made up of 7 bars
the most recent bar/candlestick will have a range that is much smaller than the previous 6 bars.
So every day, you look at that daily bar that has just closed and see if it has a narrow range compared to the previous 6 candlestick before it. It that is the case, than the bar is the NR7 day bar.
So you should anticipate a breakout of the high or low of the NR7 day bar.
Selling Rules Of The NR7 Trading Strategy
I suggest that you look for NR7 patterns when price is near resistance levels or Fibonacci retracement levels or even in the zone called the traders action zone if you are using moving averages in your trading.
Why is that?
Well, in these zones mentioned, you will tend to see price lacking upward momentum…which simply means the candlestick lengths get shorter and therefore there’s a great chance that the NR7 pattern can form.
Ok, here are the short trading rules….
identify the narrow range 7 bar pattern (NR7 pattern) on your daily chart
place sell stop pending order 2 pips below the low of the NR7 bar
place your stop loss 2 pips above the high of the NR7 bar.
use previous swing low(s) as your take profit target level or if not aim for a 1:3 risk:reward.
Buying Rules Of The NR7 Forex Trading Strategy
The best place to use the narrow range 7 bar for buying are:
support levels where price is showing downward weakness by forming the NR4 bar like shown on the chart below.
Fibonacci retracement levels in an uptrend market.(when price does a minor downward swing in an uptrend market that coincides with a Fibonacci retracement level)
traders action zones is you are using moving average crossover strategies like the floor traders method.
Here are the buying rules of the NR7 pattern:
identify the narrow range 7 day bar on your daily chart
place buy stop pending order 2 pips above the high of the NR7 bar
place your stop loss 2 pips below the low of the NR7 bar.
use previous swing high as your take profit target level or otherwise, aim for 1:3 risk:reward.
Disadvantages of the NR7 Forex Trading System
as with all forex trading strategies, every trading strategy has it weaknesses. There will be times when there will be false trading signals, when you will see price active your pending order and you think a breakout has happened but then it reverses and will take out your stop loss. Expect these kinds of things to happen. This is forex market, remember? Not heaven.
there is not clear and fast rules about how narrow the the NR7 bar should be. Its a visual thing…and this may sometimes cause a few issues for new forex traders and you can miss excellent trading setups that form.
Advantages of the NR7 Forex Trading System
This will be similar to that of the NR4 trading strategy:
a simple price action trading setup
you can use it as a set and forget trading system
only need a few minutes a day to check and place your trades.
this forex system allows you to stop over trading.
stop loss is tight and therefore the risk:reward is excellent for this trading strategy.
trading on the daily chart means that if you profit, it can be in 100-300 pips or even more and that depends on how strong the market trend is as well as how strong your never is to let your profit run and not exit too early.
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