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FXSnipers Quantitative Desk Series

NR7 Compression Breakout Strategy

Forex • EURUSD, GBPUSD, USDJPY, XAUUSD • M15 • Breakout
London/NY Overlap Open
07:00 - 12:00 UTC
Complexity: Intermediate
Max Risk 0.5% - 1.0% maximum equity risk per trade.
Target R:R Partial scale-out (50% at 1.5R) with runner trailed via M15 20 EMA.
Break-Even Trigger Move stop loss to breakeven once the initial 1.5R partial profit target is locked in.
Automation Rule-dependent

Pre-Trade Verification Checklist

Verify D1 NR7 Condition: Confirm that yesterday's daily candle range (High - Low) is strictly smaller than the ranges of the preceding 6 days.
Plot Breakout Boundaries: Draw horizontal lines representing the exact D1 High and D1 Low of the NR7 candle.
Check H4 Trend Filter: Ensure the current H4 close is above the 50 EMA for long setups or below for short setups.
Monitor M15 Session Window: Wait for an M15 candle to definitively close outside the boundary between 07:00 and 12:00 UTC.
Execute and Manage Risk: Enter market order, define stop loss at opposite boundary or 1.5x ATR, and set 1.5R limit target.

Entry Execution Criteria

  1. Identify the completion of a daily candle that exhibits the narrowest high-low range over the past 7 days (NR7).
  2. Mark the D1 High and D1 Low of this NR7 session as active breakout boundaries for the subsequent trading day.
  3. Enter on the first M15 candle close outside the NR7 High (for long) or NR7 Low (for short) between 07:00 and 12:00 UTC, provided the current H4 close is above the 50 EMA for longs or below for shorts.

Take-Profit & Target Exit

  • Take profit 50% of the position at a fixed 1:5 reward-to-risk ratio (1.5R).
  • Trail the remaining 50% position dynamically behind the M15 20 EMA, exiting entirely if an M15 candle closes on the opposite side of the 20 EMA.

Invalidation & Emergency Exit

  • Cancel all pending breakout orders for the day if both the high and low boundaries are not breached by 12:00 UTC.
  • Immediately cancel the opposite pending entry direction once the initial breakout side triggers and executes.
Stop-Loss Positioning

Set stop loss at the opposite NR7 level or 1.5x M15 ATR from entry, whichever is closer.

Documented & Formatted by FXSnipers Strategy Lab • fxsnipers.com/strategy-lab/nr7-compression-breakout-strategy
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