Simple Range

How it works

The indicator combines three key components to analyze price dynamics and volatility. First, it identifies Narrow Range 7 (NR7) and Wide Range 20 (WR20) days, marking price contractions and expansions by comparing daily trading ranges across multiple periods.

The second component uses the TTM Squeeze concept, examining the relationship between Bollinger Bands and Keltner Channels to detect volatility compression. By analyzing different Average True Range lengths, the indicator differentiates between high, mid, and low compression levels, signaling potential explosive price movements.

Why it may be useful

This indicator provides traders with a multi-dimensional view of market dynamics, helping them identify potential breakout opportunities and understand underlying price volatility. By combining range analysis, volatility compression detection, and average daily movement calculations, traders can make more informed decisions about market entry and exit points.

The comprehensive approach allows traders to assess not just price movement, but the underlying market conditions that might precede significant price changes, offering a more nuanced understanding of market behavior than single-metric indicators.

When to explore it

The indicator is most effective during periods of market consolidation or when seeking momentum trading opportunities. Traders should focus on stocks with an Average Daily Range (ADR) greater than 5%, indicating significant price movement potential. It works best when multiple components align, such as a tight volatility squeeze combined with NR7 consolidation patterns.

The signal is particularly useful for traders looking to identify potential breakout scenarios, especially when accompanied by volume confirmations and clear price action signals. It's most valuable in markets with sufficient liquidity and during trading sessions with active price discovery.

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