{"id":8608,"date":"2021-07-06T11:54:23","date_gmt":"2021-07-06T15:54:23","guid":{"rendered":"https:\/\/morpheustrading.com\/blog\/?p=8608"},"modified":"2023-01-29T23:26:15","modified_gmt":"2023-01-30T04:26:15","slug":"nr7-day","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/nr7-day\/","title":{"rendered":"How to Profit from Low-Risk Buy Entries with the &#8220;NR7&#8221; Indicator"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/lowrisk.png\" alt=\"\" title=\"\"><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#Stock_price_contractions_lead_to_volatility_expansions_that_can_provide_you_with_big_winning_trades%E2%80%93if_you_catch_them_at_the_right_time_Heres_how_to_profit_from_these_moves_with_low-risk_entry_points_using_the_%E2%80%9CNR7%E2%80%9D_indicator\" >Stock price contractions lead to volatility expansions that can provide you with big winning trades&#8211;if you catch them at the right time. Here&#8217;s how to profit from these moves with low-risk entry points using the &#8220;NR7&#8221; indicator.<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#How_to_spot_a_dry_up_in_price_volatility\" >How to spot a dry up in price volatility<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#NR7_day_The_formula\" >NR7 day: The formula<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#Why_use_the_NR7_indicator\" >Why use the NR7 indicator?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#NR7_days_do_not_automatically_trigger_buy_signals\" >NR7 days do not automatically trigger buy signals<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#How_to_spot_the_NR7_day_and_when_to_buy\" >How to spot the NR7 day and when to buy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#NR7_buy_entry_leads_to_a_20_gain_in_two_days\" >NR7 buy entry leads to a +20% gain in two days<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#Why_the_NR7_day_works_so_well\" >Why the NR7 day works so well<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/morpheustrading.com\/blog\/nr7-day\/#Scanning_for_NR7_days\" >Scanning for NR7 days<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stock_price_contractions_lead_to_volatility_expansions_that_can_provide_you_with_big_winning_trades%E2%80%93if_you_catch_them_at_the_right_time_Heres_how_to_profit_from_these_moves_with_low-risk_entry_points_using_the_%E2%80%9CNR7%E2%80%9D_indicator\"><\/span>Stock price contractions lead to volatility expansions that can provide you with big winning trades&#8211;if you catch them at the right time. Here&#8217;s how to profit from these moves with low-risk entry points using the &#8220;NR7&#8221; indicator.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Through more than twenty years of experience swing trading stocks, we have found one of the most important expressions in trading is that <em>price contraction typically leads to a volatility expansion<\/em>.  <\/p>\n\n\n\n<p>This means that when the price range of a stock tightens up, it is often resolved by a strong move with a pick-up in volatility.<\/p>\n\n\n\n<p>Typically, the longer the price contracts, the greater the price and volatility expansion (in either direction).<\/p>\n\n\n\n<p><em>Continue reading<\/em> to learn why the &#8220;NR7&#8221; indicator is a simple way to spot stocks with significant price contraction that often lead to explosive gains.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_spot_a_dry_up_in_price_volatility\"><\/span>How to spot a dry up in price volatility<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The<em> Narrow Range 7 indicator<\/em> (NR7) is used to measure the volatility of a stock.  <\/p>\n\n\n\n<p>Specifically, an NR7 day is simply the <em>most narrow trading range of the past seven days<\/em> (based on the intraday high and low of each day).   <\/p>\n\n\n\n<p>An NR7 day can be calculated manually, but we recommend automating your scanning with a program such as the simple, yet powerful <a href=\"https:\/\/www.tc2000.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">TC2000<\/a> application.<\/p>\n\n\n\n<p>Below is the exact formula for finding an NR7 day, which you can copy and paste directly in to TC2000:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NR7_day_The_formula\"><\/span>NR7 day: The formula<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>H &#8211; L &lt; H1 &#8211; L1 AND H &#8211; L &lt; H2 &#8211; L2 AND H &#8211; L &lt; H3 &#8211; L3 AND H &#8211; L &lt; H4 &#8211; L4 AND H &#8211; L &lt; H5 &#8211; L5 AND H &#8211; L &lt; H6 &#8211; L6<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_use_the_NR7_indicator\"><\/span>Why use the NR7 indicator?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In swing trading, we look for stocks that have shown an unusual amount of relative strength over a certain period of time.  <\/p>\n\n\n\n<p>After the initial rally stalls, we then look for price action to tighten up and form a <a href=\"https:\/\/www.investopedia.com\/stock-analysis\/cotd\/answ20090105.aspx\" target=\"_blank\" rel=\"noreferrer noopener\">bull flag<\/a> type pattern.<\/p>\n\n\n\n<p> The bull flag is a short-term pause in the bullish price action that typically leads to further gains.<\/p>\n\n\n\n<p>We also look for a potential pullback to a key moving average, such as the 10, 20, or 50-day moving average. <\/p>\n\n\n\n<p>We can easily find the best of these bullish pauses and pullbacks using the NR7 indicator.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NR7_days_do_not_automatically_trigger_buy_signals\"><\/span>NR7 days do <em>not<\/em> automatically trigger buy signals<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Before showing you a few actual examples of the NR7 day applied to charts, we need to make one quick, but important point about the indicator&#8230;<\/p>\n\n\n\n<p><strong><em>Not all NR7s are buy signals. <\/em><\/strong><\/p>\n\n\n\n<p>When scanning, you may see a handful of NR7 days that form on the chart, <em>but<\/em> we are only looking for an NR7 that is <em>near support of a key moving average.<\/em><\/p>\n\n\n\n<p>With the <a href=\"https:\/\/morpheustrading.com\/strategy\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"https:\/\/morpheustrading.com\/strategy\">MTG trading system<\/a>, we use the 10, 20, and 50-day moving averages.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_spot_the_NR7_day_and_when_to_buy\"><\/span>How to spot the NR7 day and when to buy<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Below is a daily chart of Zscaler ($ZS) that clearly shows how we use the NR7 as a buy signal.<\/p>\n\n\n\n<p>The commentary that follows explains the chart:<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210621ZSBLOG.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210621ZSBLOG.png\" alt=\"\" title=\"\"><\/a><figcaption class=\"wp-element-caption\"><em>Press the chart to view full-sized image<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n<p>First, we set up TC2000 to display the NR7 signal as an orange bar (below the price).  <\/p>\n\n\n\n<p>As mentioned above, remember that not all NR7 days signal a buy entry point.   <\/p>\n\n\n\n<p>Once we locate an NR7 day <em>near a key moving average<\/em>, we typically set a buy stop just above the high of the NR7 day.<\/p>\n\n\n\n<p>If the intraday high of the NR7 day is just below the highs of a tight, three-day range, then we place our buy stop above the high of the three-day range.<\/p>\n\n\n\n<p><strong>Point &#8220;A&#8221; on the chart: <\/strong>The first NR7 day is extended too far above the 10 and 20-day exponential moving averages, making it <em>not<\/em> an ideal buy signal.  <\/p>\n\n\n\n<p>Since the price did not move above the high of the NR7 day, the buy signal was never in play.  <\/p>\n\n\n\n<p><strong>Point &#8220;B&#8221; on the chart: <\/strong>The next NR7 day occurs on a pullback to the 10-day EMA, with support of the 20-day EMA just below.  <\/p>\n\n\n\n<p>The moving averages just below the price provided a low-risk buy entry, which triggered when the price moved above the high of the NR7 day in the following session.  <\/p>\n\n\n\n<p><iframe loading=\"lazy\" width=\"580\" height=\"680\" src=\"https:\/\/4966a6ff.sibforms.com\/serve\/MUIFAOyl4S5Qdajs7q3LemJKudDbMHB24p2SAorKuWWuauy3e1eFPtLgTh5BoPCh3XzIz3rZE_YyIqvc9IEl_xMkRg3MTlG0Zn5eqY3J2eKMjOE-jPuS43ZXewKssUaGt1kllR56wV2u1lBXoYfKSzEgeeTjLyjdSao87VmqsbDtgcy4jNwHMSzf0Rl346rIoBjtZwf-DX0V6tbn\" frameborder=\"0\" scrolling=\"auto\" allowfullscreen style=\"display: block;margin-left: auto;margin-right: auto;max-width: 100%;\"><\/iframe><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NR7_buy_entry_leads_to_a_20_gain_in_two_days\"><\/span>NR7 buy entry leads to a +20% gain in two days<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Next is a daily chart of Nordstrom ($JWN), which shows an NR7 day that generated an official buy signal in the model portfolio of <em>The Wagner Daily<\/em>, our nightly <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">stock trading report<\/a>.<\/p>\n\n\n\n<p> This winning swing trade led to a quick gain of +20% gain for subscribers in just a few days, so let&#8217;s take a closer look:  <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210621JWNBLOG2.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210621JWNBLOG2.png\" alt=\"\" title=\"\"><\/a><figcaption class=\"wp-element-caption\"><em>Press the chart to view full-sized image<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n<p>$JWN exploded higher in late 2020, then stalled at the $40 level and formed a base of support.<\/p>\n\n\n\n<p>While consolidating, notice the price bounced off major support of the rising 50-day moving average in the first week of March 2021.<\/p>\n\n\n\n<p>It was also the first touch of the 50-day moving average after an explosive move, which is often a buy signal in itself.<\/p>\n\n\n\n<p>On March 8, the price rallied off support of the 50-day MA on increasing volume (accumulation).<\/p>\n\n\n\n<p>That initial move higher was followed by a few days of tight-ranged price action, which produced <em>two NR7 days above the 10 and 20-day exponential moving averages. <\/em><\/p>\n\n\n\n<p>The first NR7 day could have led to a buy entry, but the second NR7 was too good to pass up&#8211;especially with volume drying up (a bonus bullish signal). <\/p>\n\n\n\n<p>We alerted <em><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\">Wagner Daily<\/a><\/em> subscribers that we were buying $JWN on March 12, as the price rallied above the highs of the tight, three-day range.<\/p>\n\n\n\n<p>As shown on the chart, this ideal buy entry led to a quick gain of +20% move in just two days.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_the_NR7_day_works_so_well\"><\/span>Why the NR7 day works so well<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In stock trading, simple strategies often produce the best results.<\/p>\n\n\n\n<p>In a bull market, one of the most consistent winning techniques is to simply <strong>look for an explosive move up, then wait for price to contract. <\/strong> <\/p>\n\n\n\n<p>When the price action contracts, the NR7 indicator helps determine your most ideal, low-risk buy entry point.<\/p>\n\n\n\n<p>Since a stock may generate numerous NR7 signals, always focus on lower-risk entries trading near their key moving averages (10, 20, and 50-day).  <\/p>\n\n\n\n<p>As you become more experienced with the signal, the NR7 can be reduced to an NR4 day.<\/p>\n\n\n\n<p>The NR4 indicator will alert you to more potential buy signals, but will allow you to catch a few more lower-risk buy points than the NR7.<\/p>\n\n\n\n<p>At Morpheus, we only use the NR4 on an extremely select group of A-rated stocks&#8211;otherwise it can be overwhelming.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Scanning_for_NR7_days\"><\/span>Scanning for NR7 days<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The easiest way to scan for NR7 and NR4 days is by copying and pasting the code above into the TC2000 platform.<\/p>\n\n\n\n<p>We also suggest using some sort of momentum filter, such as Relative Strength ranking or Biggest Gainers over a month or quarter.<\/p>\n\n\n\n<p>Adding an additional filter to your scan results will help limit the number of potential buy signals to increase your odds of finding the next big winning trade.<\/p>\n\n\n\n<p>You may also <strong><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\">subscribe<\/a><\/strong> to our flagship swing trading report, where we already do your &#8220;heavy lifting&#8221; to find the best stock trade setups with exact entry, stop, and target prices every day. Choose the <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts#Wagner-Daily-PRO\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts#Wagner-Daily-PRO\"><em><strong>Wagner Daily PRO<\/strong><\/em> <\/a>version to also receive exclusive access to <em>Swing Trader Chat<\/em> for additional trade ideas and ongoing trader education.<\/p>\n\n\n\n<p> If you have any questions about how to set up and\/or use the NR7 indicator, just <a href=\"mailto:editors@morpheustrading.com\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"mailto:editors@morpheustrading.com\">drop us a line<\/a> and we will help you out.<\/p>\n\n\n\n<p>Good luck and have fun with your scanning!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stock price contractions lead to volatility expansions that can provide you with big winning trades&#8211;if you catch them at the right time. Here&#8217;s how to profit from these moves with low-risk entry points using the &#8220;NR7&#8221; indicator. Through more than twenty years of experience swing trading stocks, we have found one of the most important [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-8608","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/8608","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=8608"}],"version-history":[{"count":10,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/8608\/revisions"}],"predecessor-version":[{"id":15798,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/8608\/revisions\/15798"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=8608"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=8608"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=8608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}