The Bank Nifty has formed a NR7 & will give a breakout or breakdown soon

Discussion in 'Traders Corner' started by Michael Gonsalves, Oct 13, 2022.

  1. Michael Gonsalves

    Michael Gonsalves Member Staff Member

    Jun 26, 2016
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    The Bank Nifty has been trading in an unusually narrow range for the past seven days and has now formed the 'NR 7' pattern. Experts say that the Bank Nifty will attempt to break out of the range soon. Such breakouts or breakdowns can give fantastic gain of as much as 2800 points

    Ghanshyam rightly pointed out in his latest video that the Bank Nifty has been channeling in a narrow range for the past seven days. It has not closed above 39300 and nor has it closed below 38500. This is very unusual given the volatile nature of the Index. He explained that this has led to a setup known as the "NR7" (i.e Narrow Range Day 7).


    He stated that the Bank Nifty will breakout of the range either tomorrow or on Monday. This will be confirmed if it closes below 38400, which will lead to a target of 38000 and 37500. On the other hand if it closes above 39300, we can expect a target of 40500.

    He advised that we should stay unbiased and take a long or short trade depending on indications the Bank Nifty gives us.

    He also emphasized that on earlier occasions when the NR7 setup had materialized, the Bank Nifty had given a mind-boggling gain of 2800 points.

    Ghanshyam also offered clear-cut suggestions on the levels that we should keep a lookout for tomorrow and how we should plan our trade.

    About the NR 7 strategy

    Experts say that the NR7 strategy is based on the premise that range contractions are followed by range expansions. The philosophy behind the pattern is similar to the Bollinger Band Squeeze, that being that a volatility contraction is often followed by a volatility expansion. Narrow range days mark price contractions that often precede price expansions.

    There is a lot of literature available on how to screen for stocks and Indices exhibiting the setup and how to plan the trades (link).