Constant range bars charts exposed
CONSTANT RANGE BARS CHARTS. (Price Movement / Action - Volatility Charts)
Created in 1995, by a brazilian Trader, Vincent Nicolellis Jr., Constant Range Bars are also called "Momentum Bars". They are standard Charts with Bars that have Open/ Close/ High/ Low and Volume, but they focus on Price Movement, eliminating the Time Factor.
The Range Bars charts have 3 rules:
- Bars have the same Lenght / Height / High-Low Range in Pips, Ticks or Money ($),
- The Close of the Range Bar is always at the High or Low of the Bar,
- The Opening of the next Range Bar is always one pip / tick, above or under the High or Low of the current Bar.
For example, let's take a look at a 30 minutes chart on Eur/Usd and Compare it to a 10 Pips Constant Range Bars Chart:
- You can clearly see that we have a smaller number of Bars on the second chart, then the first one for the same period, and the same price action.
- If the Range of the Price Movement is smaller than the Constant Bars Lenght (ex: 10 pips), another bar will not be generated until the price range will be broken upside or downside.
- Gaps can be filled with Phantom Range Bars (not on J-forex Platform).
- Time is relative for a Constant Range Bar (it varies until the range of the bar is broken).
- You can Predict the High / Low / Open / Close of the Next Bar.
- If your trading Platform Permits, You can choose the Range of the bars in Pips, ticks or Money ($).
- Trendlines and channels seem to be built for range Bars Charts.
- Trends and trend reversal are easier to detect on Range Bars Charts.
- All the Range Bars have the same Size.
- Technical Analysis is also effective in Range Bars Charts.
- You can use Stop Orders (Conditional Orders) to enter the Market, placed at the top or low of the Bar.
- Money Management and Risk Management also Apply.
- Range Bars avoid to show some of the False Signals present in a choppy, noise Market, in the time based Charts.
- Volumes are better correlated with Price because You can clearly see the accumulation of strenght in the Price Range Bar.
to your Success,