A wide range bar has a range (High minus Low) which is higher than the average range. Such a bar may be either bullish or bearish depending on where it takes place in the set up. If it comes at the end of a buying climax, it is bearish. However, it is positive if it is breaking out of a formation. Most of the wide range bars have a pull hack on the following bar. The buy zone is in the lower 50% of the range of the bar. Conversely the take profit zone is 50% to 100% added to the high of the wide range bar. This obviously is for short-term trading. The market tends to rotate by having a narrow range bar after a wide range bar. This is not 100% objective and the definition of a wide range bar is subjective. This is where the art of chart reading comes into focus. This talent ia developed only by looking at many charts over a long period of time.
Wide-Range Reversal Bar after Run Up
When the market is moving aggressively up in new high ground and the following actions take place, it is time to move stops closer or take profits:
1. A wide-range reversal bar.
2. A narrow-range or inside bar comes after the wide range bar.
This type action implies supply is entering the market.
TWO-DAY INTERSECTION
Two wide-range bars to the upside that overlap only a small amount indicate aggressive demand for two bars in succession. The intersection of these two bars is a zone of support/resistance . Orders placed around these points can let one get on board with a small risk. Stops would be just outside the zone.
Wide Range Bar as a breakout.
A price breakout from a consolidation with a wide range bar, is a sign of strength.
