Toby Crabel
NR7: the narrowest bar in seven, and the expansion that tends to follow it
Traders have always said things like 'the market has gone quiet' and meant something by it. Toby Crabel's contribution was to make the observation a number: a bar whose range is the narrowest of the last seven marks a contraction, contraction is reliably followed by expansion, and the direction of the break is worth trading. The whole setup is a ruler laid across seven bars — no indicator, no parameter to tune, and nothing to interpret.
- Style
- Breakout
- Approach
- Mechanical
- Difficulty
- Intermediate
- Horizon
- Swing (days to weeks)
- Holding period
- One to five days
- Time needed
- 15 minutes after the close
- Markets
- Index futures · Liquid stocks · FX
- Source
- Day Trading with Short Term Price Patterns and Opening Range Breakout — Toby Crabel
The rule set
- Find the bar whose high-to-low range is the narrowest of the last seven
- Buy a break above that bar's high on the following session
- The setup bar's low is the natural stop
- The move is expected within a few bars — do not hold it as a trend position
- The pattern itself says nothing about direction; a break of the low is the mirror-image short
What makes it distinctive
- It measures a thing traders describe vaguely — 'the market has gone quiet' — as a single number that is either true or false
- The setup bar defines both the entry and the risk, so the whole trade is specified before it triggers
- Contraction and expansion alternate in every liquid market, which is why the pattern travels across instruments without retuning
When it works
Liquid markets after a genuine lull — a holiday week, a pre-earnings drift, a quiet consolidation ahead of a catalyst. The contraction marks agreement; the catalyst breaks it.
When it fails
In a market that is quiet because nobody cares, the expansion never comes and the break fails immediately. Only the long side is expressed in the published version, which cuts the pattern's signals in half.
How a decision moves through it
Input
Daily bars
Highs and lows, because range is the whole measurement. Crabel worked on intraday futures data; the published version runs on dailies.
Measure
Each bar's range against the narrowest of the last seven
The published rule computes the bar's range minus the rolling seven-bar minimum of range. The window includes the bar itself, so a reading of zero means this bar is the narrowest of the seven — that is Crabel's NR7.
Decide
Yesterday was an NR7, and today breaks its high
Both halves in one rule, pointing at different bars: the previous bar was the narrowest of its seven, and this bar trades above that bar's high. A bar that is both the narrowest and a new high almost never exists, which is why the setup and the trigger are always a bar apart.
Size & protect
Stop below, and an exit for the expansion that fails
The published version carries a 3% stop as a proxy for the setup bar's low, and exits if a close falls below the previous bar's low — the sign that the expansion did not come.
Act
Buy the break, and be out within a few bars
The pattern predicts an expansion, not a trend. Whatever the break is going to deliver, it delivers quickly.
A ruler where the squeeze uses a standard deviation
Every liquid market alternates between contraction and expansion — stretches where the daily ranges shrink and stretches where they widen. That alternation is one of the few regularities in markets that holds across instruments and decades, and several systems in this library are built on it.
Crabel's version needs no statistics at all. Lay a ruler across the last seven bars: if today's high-to-low range is the smallest of them, today is an NR7. That is the entire measurement. It was computable by hand in 1990 and it is exactly as computable now, which is part of why the pattern has survived unchanged while indicator fashions have not.
What a narrow bar is evidence of
A narrow range means buyers and sellers spent the whole session agreeing. Agreement is a temporary state — the quiet day loads the spring, and the break of its range is the first evidence of which way the spring releases.
This is why the entry is a break of the setup bar's own high rather than any other level. The NR7 bar is a compressed summary of the market's last point of balance; trading beyond its extreme is the market leaving that balance, and the direction of leaving is the only directional information the pattern ever produces.
Crabel published the pattern in a book that has been out of print for decades, then spent the following ones running a short-term quantitative fund. The book's actual subject is day trading — these patterns paired with the opening range — and the version published here is a daily-bar adaptation: same measurement, same logic, entries and exits read off daily bars and held for one to five days.
An expansion is not a trend
The pattern's claim is narrow: after an unusually quiet bar, the next few bars tend to be wider, and the first break tends to point the direction. It says nothing about what happens after the expansion arrives.
- The move is expected within a few bars. If it has not come, the setup has expired rather than 'not worked yet'.
- A close back below the previous bar's low ends the trade — that is the expansion failing, and the published version exits on it.
- Holding a winner as a trend position is a different system, with different statistics, entered on a signal that never claimed to find trends.
Five ways into this system
- The narrowest bar of seven, and the break that turns it into a tradeOne measurement, one trigger, and a trade that is fully specified before it exists. The only judgement left is whether to take it.7 min read
- Sizing a trade whose stop is close because the market was quietThe setup bar is narrow by definition, so the natural stop is close by definition — and a close stop is an invitation to a position larger than the trade deserves.6 min read
- Quiet before something, not quiet because of nothingThe measurement works everywhere; the trade only works where the quiet is temporary. Telling those apart is the market-selection problem in one sentence.5 min read
- Breaks that die at once, quiet that continues, and the half you never tradeThe pattern's failures are cheap individually — the stop is the narrowest bar in seven — and frequent enough that the system's character is many small losses punctuated by expansions that pay for them.6 min read
- NR7 for beginners: what a bar's range tells you, and why quiet days matterOne of the simplest setups in this library to compute, built on one of the most reliable regularities in markets — and a good first lesson in why simple and easy are different things.6 min read
The ideas behind it
This system assumes you already know these. Each one is explained from scratch in Investing 101.
Compare with
- Bollinger Band Squeeze BreakoutWait until the bands compress to the narrowest they have been in months, then trade whichever direction price breaks out of the compression.
- Opening Range Breakout (ORB)Mark the high and low of the first 30 minutes, buy when price breaks above that high, exit if it falls back through the low — and be out by the close either way.
These are documented methods described for study. Nothing here is investment advice, a recommendation, or a claim about future returns — every system on this page has losing periods, and the pages say where.
Reading about a system is not having one.
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