ID-NR4 is a market structure feature that I don’t purposely look for – my strategy should pick up these setups just due to the presence of S/R. However it may be a concept that appeals to you. If that’s so, it’ll make an easy addition to your analysis routine, taking about one second to determine whether it’s potentially in play or not.
Let’s look at the ID-NR4.
I’m not sure of the originator of this concept. I believe I first heard of it in Linda Raschke and Larry Connors excellent book, Street Smarts. I believe they got it from Tony Crabel. I’ve seen it in several other sources as well.
In any case, it’s very simple.
ID stands for Inside Day. That is a daily candle which has a high below the previous day’s high and a low above the previous day’s low. So the whole range fits within (inside) the range of the previous day.
NR4 stands for narrowest range of the last 4 days.
An ID-NR4 candle meets both the ID and NR4 requirements.
Let’s look at a recent example. The daily chart below identifies an ID-NR4 candle on Nov 17th. You can visually see that the range of this candle exists inside the range of the previous candle; plus the range is the smallest of the last four days.
