What it looks like
Compare the range (high minus low) of the latest candle with the three before it. If it is the smallest of the four, it is an NR4. Its body and colour do not matter. When an NR4 is also an inside bar, many traders treat it as an extra tight squeeze.
What it means
The market has gone quiet and the range is squeezing. Quiet tends to be followed by a move, though the candle does not say which way. The point of the pattern is to mark a small, defined range so that when the move comes you have a clear trigger and a clear place for the stop.
How to trade it
- 1
Mark the high and low of the bigger candle before the NR4.
- 2
Confirmation: a close above the high (buy signal) or below the low (sell signal).
- 3
Entry: at the close of the breakout candle.
- 4
Stop: on the other side of the bigger candle. Example on gold: the bigger candle before the NR4 runs from 4,020 to 4,032, the NR4 itself from 4,024 to 4,029. A candle closes at 4,034. Buy at 4,034, stop at 4,018, a 16 point risk.
- 5
Target: the next key level or 2 times the stop.
A close back inside the bigger candle's range after the breakout.
Where it works best
On 1 hour to daily charts, especially before a session open or ahead of scheduled news, when quiet often gives way to a move.
WickSpeak spots every NR4 automatically and names it on the candle that made it. The note says what it is, how to trade the break and the close back inside the bigger candle that proves it wrong. In Playbook you can use it as a condition in a play, alone or alongside other patterns and indicators (any of the 146 patterns can be a condition), and backtest it on past candles with your own costs.
Common mistakes
- Guessing the direction before the break comes.
- Trading NR4s in the middle of a dead session with no reason for a move.
- Ignoring nearby levels that may block the breakout.
Related patterns
Questions traders ask
What does NR4 mean?
Narrow range 4: the candle with the smallest high to low range of the last four candles. It signals a quiet moment.
How do you trade an NR4?
Mark the high and low of the bigger candle before it. Buy a close above the high or sell a close below the low, with the stop on the other side.
What is the difference between NR4 and NR7?
NR4 compares the last four candles; NR7 compares the last seven. An NR7 is a quieter, rarer squeeze.
What proves an NR4 breakout wrong?
A close back inside the bigger candle's range after the break.