Coding Time Compression Scanners: Narrow Range Candles

Identify NR4 Candles for a stock Using Python and Zerodha

Narrow Range 4 (NR4) Pattern:

The Narrow Range 4 (NR4) pattern is a technical analysis pattern used by traders to identify potential breakouts or significant price moves in a financial instrument, such as a stock. This pattern focuses on the trading range or volatility of a stock over a specific period, typically four trading days.

Here’s how the NR4 pattern is defined:

1. Narrow Range: The NR4 pattern occurs when the trading range (the difference between the high and low prices) of a particular trading day is narrower than the trading ranges of the previous three trading days.
2. Four-Day Period: The NR4 pattern looks at a four-day period, including the current trading day and the previous three trading days.
3. Breakout Signal: When an NR4 pattern is detected, traders often interpret it as a potential signal for an impending breakout. A breakout could be in either direction, meaning that the stock’s price may break out to the upside (bullish) or to the downside (bearish) shortly after the NR4 pattern appears.
4. Volatility Contraction: The NR4 pattern suggests a contraction in price volatility, where the market is experiencing a period of relatively quiet or narrow trading ranges. Traders anticipate that this period of reduced volatility will be followed by a…