Chapters in Technical Analysis & Trading Tools
Chapter 5 of 10 · 6 min read
Chart patterns: NR7, inside bars, VCP, double tops and bottoms
Common price structures the scanner and Trade Lab detect, and what each implies.
Volatility contraction
NR4 and NR7 mark the narrowest daily range in 4 or 7 sessions, often a coiled spring before expansion. A VCP (volatility contraction pattern, popularised by Mark Minervini) shows successively tighter pullbacks inside an uptrend.
Inside bars
An inside bar trades entirely within the prior bar's range, signalling pause. A break of the mother bar's high or low shows direction.
Double top and double bottom
Two peaks near the same level followed by a neckline break suggest a top; two troughs and a breakout above the neckline suggest a bottom. They need confirmation: the break, ideally with volume.
Patterns are probabilities, not rules; measure failure rates with a backtest.
Key takeaways
- Tight ranges tend to precede big moves, but not which direction.
- Wait for the trigger bar, not the setup alone.
- Backtest each pattern on your universe.
Put it into practice
Open the live page on Market Intelligence and see this concept on real data.
Keep learning
- How stock screeners work · Technical Analysis & Trading Tools
Education only, not investment advice. Updated 2026-10-09.