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Tight Range Detection

MarketAlpha’s Tight Range signal identifies periods of price compression — moments when volatility contracts, candles shrink, and trading ranges tighten. These quiet zones often precede sharp directional moves, making them powerful early setups for breakout or breakdown strategies.

Unlike traditional indicators that rely on fixed formulas or Bollinger Band width, MarketAlpha’s detection system visually reads the chart like a human would, using real-time pattern recognition across multiple timeframes.

What Is a Tight Range?​

A tight range is a short sequence of daily candles where price trades within a narrow band — often due to indecision, low volume, or accumulation. These conditions:

  • Compress volatility
  • Consolidate energy
  • Trap liquidity
  • Lead to expansion once broken

Classic technical patterns like flags, pennants, inside bars, or flat bases often fall into this category — and are captured by our AI without needing specific labels.

How MarketAlpha Detects It​

The AI analyzes every ticker daily and flags a Tight Range setup when it detects:

  • Two or more candles with contracting high/low ranges
  • Price trading inside previous-day or multi-day ranges
  • Decreasing volatility and volume within structure
  • A visual coiling or compression effect across key support/resistance zones

This detection mimics what a trained technical analyst would recognize:

  • Inside candles and nested bars
  • Narrow-range base building above/within structure
  • Fading volatility as price approaches breakout points

Because the AI evaluates structure and slope dynamically, it can detect both obvious and subtle forms of tight range behavior — whether flat or sloping.

Why It Matters​

Tight ranges signal inflection zones — areas where price has paused, but not reversed. These setups matter because:

  • They precede volatility expansion
  • They provide clean entry/stop frameworks
  • They allow early positioning ahead of catalyst moves

Breakouts from tight ranges tend to have strong follow-through — especially when aligned with:

  • Alpha Strategy direction
  • Low resistance path
  • RSI divergence or volume confirmation

Screener Integration​

You can screen for this signal using:

  • Tight Range = Yes — Shows tickers with confirmed tight range setups from the previous trading day’s close

This makes it easy to:

  • Spot early breakout candidates
  • Build watchlists around compression zones
  • Combine with other filters (R/R ≥ 2.0, Price Action Confirmation ≥ 3, Breakout Volume)

Use Cases​

  • Breakout Traders — Look for expansion out of coiled ranges
  • Swing Traders — Time entries with low volatility risk
  • Trend Followers — Enter pre-move on consolidating setups
  • Mean Reversion — Watch for fake-outs or breakout failures

Tight Range Detection gives you early access to setups where price is coiling — compressing before expansion. It's a visual AI signal that sees what real chartists look for: pressure building before a move.