Showing posts with label Toby Crabel. Show all posts
Showing posts with label Toby Crabel. Show all posts

Sunday, July 13, 2025

8 Bar Narrow Range (8BNR) Toby Crabel Price Pattern in the NASDAQ

The 8 Bar Narrow Range (8BNR) is a technical trading pattern developed by Toby Crabel, introduced in his book "Day Trading with Short Term Price Patterns and Opening Range Breakout". 
 
 
It is part of his framework of price action patterns that focus on periods of volatility contraction (narrow price ranges) as precursors to potential volatility expansion (significant price movements). Here's an explanation of what the 8BNR pattern suggests and its implications for traders:

The 8BNR pattern occurs when the 8-day range (the difference between the highest high and the lowest low over an 8-day period) is the narrowest range compared to any other 8-day period within the last 40 trading sessions. This indicates a period of low volatility or price consolidation, where the market has been trading in a relatively tight range over the past eight days compared to recent history.

The 8BNR signals a potential breakout, but it does not specify the direction. Traders often use the pattern in conjunction with Crabel’s ORB strategy:
 
Long Trade: Place a buy stop order at the open price plus the "stretch" (a calculated value based on the 10-day simple moving average of the smaller difference between the open and high/low).
Short Trade: Place a sell stop order at the open price minus the stretch.
 
Crabel’s research suggests that breakouts are more likely to be profitable if they occur early in the trading session. Trades triggered later in the day carry higher risk and may warrant smaller position sizes or avoidance of overnight holds. The 8BNR is more reliable when it occurs after a clear trend or during a pullback in a trending market. Multiple narrow range patterns in close proximity (e.g., consecutive NR7 or 3BNR, 4BNR, 8BNR days) may indicate congestion, reducing the reliability of the breakout.


Like all technical patterns, the 8BNR is not foolproof. False breakouts, market noise, or unexpected events can lead to losses. Traders should avoid mechanical application and incorporate additional technical or fundamental analysis to confirm signals. Always combine the pattern with other market analysis for best results.
  
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Thursday, November 7, 2024

The 24 Chinese Solar Terms in 2025 │ Winter Begins Today ( 立冬 - Lì Dōng )

 Winter begins on November 7, which is 225° from the Vernal Equinox (0° Aries). 
This is what W.D. Gann referred to as a Natural Trading Day. 225° represents 0.618 of the solar year.
 
A solar term ( 節氣 ) is one of twenty-four periods in the traditional Chinese lunisolar calendar, each corresponding to a specific astronomical event or natural phenomenon. Starting from the spring equinox, these points are spaced 15 degrees, or roughly 15 days, apart along the ecliptic and are used by lunisolar calendars to remain synchronized with the seasons.

Changes in trend often occur every 30° as the Sun moves into the next sign of the zodiac.
30° roughly equals one month, 30 calendar days or 21 trading days.
 
W.D. Gann knew that the astronomical year begins on March 21st and that this was also a very important seasonal time for financial markets. He used geometrical divisions of the solar year (degrees of solar longitude as well as calendar days) to ascertain turning points. Changes in trend often occur every 30° as the Sun moves into the next sign of the zodiac.
 
Dates at 45°, 90°, 135°, 180°, 225°, 270°, and 315° solar degrees from the Vernal Equinox (0° Aries) are what Gann called Natural Trading Days, with 225° representing 0.618 of the solar year (November 7). Though 15°, 22.5° and 45° also may coincide with changes in trend, Gann stressed the importance of the cardinal points (90° apart). He also used multiples of 90° and 144°, i.e., 90°, 180°, 270°, etc., and 144°, 288°, 432°, 576°, 720°, etc. 
  
 
Combining the Chinese Solar Terms and Gann astro-methods for market timing with the following concepts may further increase the probability of accurately pinpointing market turns:
 
 
 

 

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Sunday, September 8, 2024

Toby Crabel’s Bull Hook Trading Strategy Tested | Ali Casey

As an algo trader, I value patterns for their ease of programming and testing, which allows for the development of robust trading strategies. Today, we'll explore bull and bear hooks, patterns that can vary in details but generally serve to catch traders on the wrong side. Toby Crabel, Joe Ross, and Thomas Bulkowski, among others, have variations of these patterns.

Toby Crabel's original definition of the Bull Hook pattern:
» A Bull Hook occurs on Day 2. A Bull Hook is defined as a day with a higher open than the 
previous day's high followed by a lower close with a narrowing daily range. The next day (Day 1), 
a trade is taken on the initial move off the open, preferably to the upside. «
 
Toby Crabel's original definition of the Bear Hook pattern:
  » Bear Hook is a day in which the open is below the previous day's low and the close 
is above the previous day's close with a narrow range relative to the previous day. As implied by 
the name there is a tendency for the price action following a Bear Hook to move to the downside. «

The Bull Hook pattern has two main forms:

Bull Hook 1: In a downtrend, the pattern is identified when today's bar is an up bar with a smaller range than the previous day and is an inside day (high lower, low higher than the previous bar). We buy with a stop order above the high of this bar.
Bull Hook 2: Here, today's bar is a down bar with a smaller range than the previous day, opening above the previous high and closing below the previous close. This pattern involves just two bars.


For testing, I used TradeStation with S&P 500 e-mini futures data. The backtest for Bull Hook 1 was disappointing, showing a loss with only 15 trades, which seemed unusual given its pullback nature. A deeper analysis suggested that the specific conditions, particularly the inside day and green bar requirements, were limiting trades. By removing some conditions, like the inside day and green bar, and focusing on a simpler pullback strategy, the results improved significantly with about 200 trades and positive performance metrics. For Bull Hook 2, the test also yielded fewer trades than expected, which might be attributed to its breakout nature, not performing well on the S&P 500. Simplifying the conditions here also improved the results somewhat, though it remained less effective. The Bear Hook pattern, when flipped for long trades, performed better but still had a low trade count. Removing some conditions and simplifying it increased the trade count and improved performance. While both Bull Hook patterns had potential, their effectiveness was highly dependent on specific conditions and the number of trades generated. Simplifying the patterns often led to better results.

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Friday, August 23, 2024

Recent Toby Crabel Price Pattern Setups in the E-mini S&P 500 Futures


 
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Wednesday, June 26, 2024

2-Bar Narrow Range Setup | Toby Crabel

2-Bar Narrow Range (2BNR)  represents a condensation of the market concept called congestion or contraction. Contraction is subsumed within the market Principle of Contraction/Expansion which states that the market, having a specific nature, is constantly changing from a period of movement to a period of rest and back to a period of movement. This interchange between the phases of motion and rest are constantly taking place with one phase directly responsible for the other's existence. 2-Bar NR represents this market principle and provides a means of quantifying contraction in any market environment. This is possible because of the open-ended nature of the concept 2-Bar NR. 
 
 2-Bar Narrow Range (2BNR) in the S&P 500 on June 26, 2024.
If the 2-bar range is the narrowest range from high to low of any two day period relative to
any two day period within the previous twenty days, we are sitting on a 2BNR trading setup for June 27.

Because it is not dependent on a constant measurement it represents contraction in a volatile or narrow market period. In other words, contraction is a relative condition that can occur even in a volatile market. Once a market concept is formulated it is tradable. An ORB (Opening Range Breakout) trade is taken the day after the 2-Bar NR formed. An ORB trade is entered at a predetermined amount above or below the opening range (stretch), that is the range of prices that occur in the first 30 seconds to 5, 15 or 30 minutes of trading. 
 
The assumptions are that with a contraction of this type trending action would follow the direction of the breakout, and that because this pattern exhibits a more defined contraction that trending would take place over the next several days also. It is advantageous if the 2-Bar NR is holding at an important angle of support/resistance, including trendlines, when it is formed. Once the market has moved away from the open in one direction after a 2-Bar NR, it should not return to the opening price. If it were to do so, that would disqualify the day as a trend day. Trending action is ideal and is expected after the pattern.
 
Reference:
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Friday, June 14, 2024

The Principle of Contraction/Expansion | Toby Crabel

Price always moves from Consolidation to Expansion, never from Consolidation to Reversal or from Consolidation to Retracement. 
 

After an Expansion, two possible scenarios can occur: either a Retracement or a Reversal, followed by another Expansion or Consolidation. That’s it—it happens over and over again. 

» The principle of Contraction/Expansion is defined as the market phenomenon of change from a period of rest to a period of movement back to a period of rest. This interaction between the phases of motion and rest are constantly taking place, with one phase directly responsible for the others' existence. «
 
Toby Crabel, 1990
 
In his study 'Day Trading with Short Term Price Patterns and Opening Range Breakout' Toby Crabel defined the following range contraction and expansion patterns:

NR4 - The narrowest daily range relative to the previous three day’s daily ranges compared individually.
NR7 - A day with a daily range that is narrower than the previous six day’s daily ranges compared individually.
WS4 - (Widespread 4) A day with a daily range that is larger than any of the previous three day’s daily ranges.
WS7 - (Widespread 7) A day with a daily range that is larger than any of the previous six day’s daily ranges
             compared individually.

His key findings were: A cumulative total of Gross Profits for the contraction patterns vs expansion patterns on trades in the direction of the move off the open showed $710,000 for contractions on 7,313 trades and $102,000 for expansions on 7,524 trades. Profits were seven times larger for ORB (Opening Range Breakout) trades after contractions than expansions.

» Clearly something is going on here. The suggestion from these results is that one should be looking to go with a forceful move off the open after a contraction and not willing to do so after an expansion. In fact, fading price action off the open, with trend, after an expansion is a consideration. Other patterns can help with the decision on whether to fade a move off the open along with previously mentioned market context. If nothing else, one should be aware of the dangers of ORB trades the day after a big directional day. Caution is necessary after expansions. This is when the most attention is given to the market by the novice trades who invariably get caught in whipsaws and trendless markets. «  

 The more defined the congestion area, the better the chances for a Trend Day activity the following day.

Bitcoin - Inside Bar Narrow Range 4 (ID/NR4) in monthly, weekly, daily and 4 hour bar charts.

» An object at rest stays at rest and an object in motion stays in motion with the same speed 
and in the same direction unless acted upon by an unbalanced force. «
Isaac Newton's 'First Law of Motion', 1687
 
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Sunday, June 9, 2024

An Outside Look at Inside Days | Larry Williams

First, lets define what constitutes an inside day. An Inside Day is exactly the opposite of an Outside Day. That is, today’s high is less than yesterday’s high and today’s low is greater than yesterday’s low. Hence the terminology inside day, as all of today’s price range or trading activity took place inside of yesterday’s range. An inside day is usually thought to be an indication of congestion. A price could not exceed the previous day on the upside nor could it break below the previous day’s low on the downside.

 » Inside Days are one of the most reliable forecasting patterns to occur in the marketplace. «
 
Chartists and authors have not paid very much attention to the inside days over the years. They have made note of them, but this is the first time, to my knowledge, that anyone has made a serious study of the impact of inside days. And, wouldn’t you just know it … inside days are one of the most reliable forecasting patterns to occur in the marketplace!

  » In a study of nine major commodities covering 50,692 trading sessions, I noted 3,892 inside days,
suggesting we will see these days appear about 7.6 percent of the time. «
Larry Williams, 1998.

There does seem to be some validity to this. The following chart shows what happens when we have an inside day with a down-close while prices are lower than they were 10 days ago. In the Standard and Poor’s, 71% of the time you were higher the next day. This may not even be as significant as the fact that 71% of the time you were higher 20 days after this occurrence. In the Value Line, price is higher 50% of the time after the occurrence, and in Treasury Bonds it’s higher 75% of the time. The pattern in Silver was not nearly as bullish, which surprises me because I had used this trading technique in Silver with some success … which just goes to show you! In Silver, on 36% of the time you were higher 20 days following the occurrence of the pattern. Soybeans were higher 57% of the time, Bellies 50% of the time and the Swiss Franc, where so far we have not found a pattern that forces prices higher, you were up only 22% of the time.

'Inside Days in the S&P 500' - Toby Crabel, 1990.

For a moment though, let’s take a look at just the occurrence of an inside day. What happens when we simply have an inside day with a down-close? Does that, on its own merit, forecast any significant market activity? The results are on the next few pages [of 'The Future Millionaire's Confidential Trading Course']. What can you find?

Then there’s the other side of this coin. What happens if we have an inside day with an up-close? Does this forecast positive action? It appears that it does to some extent. Study the tables for yourself. I have gone to the computer to give you the results for almost all possible configurations of the inside days. While, quite frankly, much of the data suggests random-gibberish-behavior, others are relationships that you can find and successfully trade with. What you need to focus on here is not that the patterns will always work for you, but that patterns, like methods, systems and tools, will give you the much needed odds that lead to successful speculation.
 
I have not exhausted all possible ways of looking at inside days with down-closes, though I have looked at the majority of the relationships one can study. There are others. As an example, what happens if the prices are higher, or if prices are lower following an inside day five days later. Does that mean that the down trend will continue? One could also ask the questions about an outside day following an inside day. Is this a particularly bullish pattern? (It is.) As you can see, your opportunity for research here is unlimited. If you have a computer, some data, and a desire to study the markets, here is fertile ground for you to come up with your own great ideas.

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Friday, December 1, 2023

Weekly Opening Range Breakouts & Daily Range As Multiple Of Asian Range

 
Reference:
Stacey Burke (2023) - Trading Inside or Outside the Daily and Weekly Range.
TPR (2023) - The Weekly Opening Range & ICT Weekly Range Profiles.
 
 The ICT 2022 Mentorship Trading Strategy.
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Monday, September 25, 2023

Narrow Range 4, Narrow Range 7, and Inside Days | Toby Crabel

Narrow range patterns were described by Tony Crabel in his book, "Day Trading with Short Term Price Patterns & Opening Range Breakout". Even though it was published in 1990, many of Crabel's concepts and set-ups are still effective, and in particular his NR4 (Narrow Range 4) and NR7 (Narrow Range 7) patterns became quite popular with short-term traders. 
 
The idea for set-ups is similar to the Bollinger Band Squeeze or Short-Squeezes and Long-Squeezes in general: a volatility contraction is followed by a volatility expansion; narrow range days mark price contractions that precede price expansions. The NR7 day and the NR4 day as such are 'neutral' when it comes to future price direction, and other tools need to be employed to determine directional bias. 
 
Because NR4/NR7 days are relatively commonplace and the range is small by definition, the chances of whipsaw are above average. A break above the NR7 high can fail and be followed by a break below the NR7 high. Just be aware of this probability and keep the bigger picture in mind. In other words, be wary of sell signals within a bullish pattern, such as a falling flag or at a support test.
 
Examples of Narrow Range 7 Inside Days (IDnr7) in the Nasdaq.

Traders will want to qualify NR7 signals because they are quite frequent. A typical instrument will produce dozens of NR7 days in a twelve month period and a daily scan of US stocks will often return hundreds of stocks with NR7 days. Traders can increase or decrease the number of narrow range periods to affect the results. 
 
A decrease from NR7 to NR4 would increase the number of instruments fitting the criteria, while an increase from NR7 to e.g. NR20 would decrease the number of signal days. Consider NR7 and NR4 days that are at the same time Inside Days (IDnr4, IDnr7) also as signal days (see chart above).

Strategy: This strategy starts with the day's range, which is simply the difference between the high and the low. Crabel used the absolute range, as opposed to the percentage range, which would be the absolute range divided by the close or the midpoint. Because we are only dealing with four and seven days, the difference between the absolute range and percentage range is negligible. 
 
Crabel focused on two different narrow range timeframes: four days and seven days. An NR4 pattern would be the narrowest range in four days, while an NR7 would be the narrowest range in seven days. It is a very short-term pattern designed to initiate a trade based on an "Opening Range Breakout", which is another term from Crabel's book. Look for an upside breakout when prices move above the high of the narrow range day and a downside breakdown when prices move below the low of the narrow range day.

Bull Signal:
  1. The daily bias is bullish.
  2. Identify a NR4, a NR7, an IDnr4 or an IDnr4 day.
  3. Buy on move above high of narrow range day high.
  4. Set trailing stop-loss.
Bear Signal:
  1. The daily bias is bearish.
  2. Identify a NR4, a NR7, an IDnr4 or an IDnr4 day.
  3. Sell on move below low of narrow range day low.
  4. Set trailing stop-loss.
Targets: Because this is a short-term setup, it is important that the trade starts working right away. Failure to continue in the direction of the signal is the first warning. After a buy signal, a move below the low of the narrow range day would be negative. Conversely, a move above the high of the narrow range day would negate a sell signal. Consider profit targets and stop-losses. 
 
Crabel took profits quite quickly, usually at the close of the first trading day or on the first profitable close. Again, this is very short-term-oriented and might not be suitable for all traders. Alternatively, profits can be taken near the next resistance levels or a percentage target can be used. Base stops on previous highs and lows, the Average True Range (ATR), etc. For example, the stop-loss on a long position could be set two ATR values below current prices and trailed higher.
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Wednesday, December 21, 2022

Range Extension & Contraction - Reversals - Time Cycles | Stacey Burke

 
oOo
 
Old Baron Rothschild's recipe for wealth winning applies with greater force than ever to speculation. Somebody asked him if making money in the Bourse was not a very difficult matter, and he replied that, on the contrary, he thought it was very easy. "That is because you are so rich," objected the interviewer. "Not at all. I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this : I never buy at the bottom and I always sell too soon."

Jesse L. Livermore

oOo

Quoted from:
 
See also:
 
Weekly Cycle and Market Structure in Gold (1 hour chart):
Daily and Weekly Highs and Lows, Daily and Weekly Pivot Levels, Inside Days, Outside Days,
Daily and Weekly Accumulation-, Extension-, and Distribution-Levels, Breakouts, False Breakouts,
V Patterns, M & W Patterns, Peak Formation Highs and Lows.
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