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INDICATORS
Historical Volatility and
Pattern Recognition
by Laurence A. Connors
and Linda Bradford Raschke
A market tends to move swiftly from periods of price consolidation to new levels. Here's how to recognize the setup before a market moves out of a short-term consolidation, from the authors of Street Smarts: High Probability Short-Term Trading Strategies.
FIGURE 1: NARROW RANGE 4. This day's range (the difference
between the high and low) is the narrowest daily range relative to the
previous three days' daily ranges compared individually.
"This pattern was discussed by Toby Crabel in his Day Trading with Short-Term Price Patterns, and his research indicated that markets tend to experience larger than normal moves after NR4 days."
Excerpted from an article originally published in the August 1996 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved.
© Copyright 1996, Technical Analysis, Inc.
Return to August 1996 Contents
 
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