The Defining Range🔬 Master it and you master market structure Understanding Defining Range (DFR) changed everything about how I read structure. A thread🧵
Defining Range (DFR) This is the key price range that sets the basic structure of price movement for a specific period (day, week, month, etc.).
1. How to determine the Defining Range? It is the time range T2+T3 of Q1 (Q1 is divided into 3 thirds and the last 2/3 are selected). You can use the first quarter of any time cycle. For example, within a day, DFR will be from 20:00 to 00:00 (NY time zone).
2. Next, a deviation is expected, usually in the amount of 1.5 DFR, but this value is variable. It is necessary not just to measure STDV, but to link it to price action/liquidity elements. After that, decoupling may follow and the price will begin to move in the opposite
3. The price within this range is consolidation, and a breakout of its boundaries signals the possible start of a new movement. DFR often coincides with important SSMT, FVG, or OB levels, which in turn reinforces its significance.
Example of use: At the beginning of the week, the market forms a DFR (the last two-thirds of Monday's range are taken). If the price remains within this range, we wait for the market to show a “break” through the Premium/Discount zones. If the price breaks through the DFR with
If the price has not exceeded the DFR, this does not mean that it is not working. The price may receive a reaction within the premium/discount range.
You can also view decorrelations between how assets interact with DFR
An example of classic DFR execution within a day: a deviation of 0.5 from below, then the same deviation from above.
Conclusion: The defining range is a fundamental zone that helps distinguish between phases of market consolidation and expansion.
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