Candle Range Theory (CRT) Trading Strategy Explained
93 views 4 min Money & business
93 views 4 min Money & business
Today, we're breaking down the CRT strategy or candle range theory.
The concept is simple. If price sweeps the high of a candle and closes back below it, we're looking for price to move toward the low.
If price sweeps the low and closes back above it, we're looking for price to move toward the high.
Once the CRT range is established, we drop to a lower timeframe to find an entry.
Let's start with a bearish example. We begin with the four-hour candle and wait to see which side price takes.
Price sweeps the high and closes back below it.
That establishes the CRT high, giving us a bearish expectation toward the CRT low.
Now we move to the fifteen-minute chart and look for an entry.
Here we have a mitigation block and a fair value gap.
The entry comes from the fair value gap.
The stop goes above the swing high and the target is the CRT low.
Now let's look at the bullish side. Price sweeps the previous candle's low and closes back above it.
This establishes the CRT low and gives us a bullish target toward the CRT high.
We then drop to the fifteen-minute timeframe to find our entry.
Here, price sweeps liquidity and breaks structure to the upside.
We also have a fair value gap overlapping with an inverse fair value gap, creating a balanced price range.
That becomes our entry zone. The stop goes below the balanced price range with the CRT high as the target.
Next, let's move to a daily CRT example.
Price sweeps the previous candle's low and closes back above it.
That gives us a bullish CRT setup with the CRT high as our target.
Because we're working from the daily timeframe, we move down to the one-hour chart for the entry.
The CRT low is formed by a liquidity sweep.
We then see a bearish fair value gap get broken and become an inverse fair value gap.
That gives us a potential retest area for the long entry.
The stop goes below the CRT low while the target remains the CRT high.
For the final example, let's test the entry.
Price sweeps the previous candle's low and closes above it, giving us a bullish CRT setup toward the CRT high.
Now we move to the one-hour chart and have two possible entry areas.
Which one would you choose? Point A or point B?
Take a few seconds and decide. The better entry is point A. So why is point A the entry?
First, price is forming higher highs and higher lows, showing bullish structure.
Then we get a break of structure to the upside, leaving behind multiple fair value gaps.
Point A sits inside a fair value gap in the discount zone with a mitigation block providing additional confluence.
That gives us our entry area. The stop goes just below the mitigation block and the target is the CRT high.
The final piece is timeframe alignment. Don't apply CRT randomly across timeframes.
The higher timeframe determines where the CRT setup forms while the lower timeframe gives you the entry.
The alignment is weekly CRT to four-hour entry, daily CRT to one-hour entry, four-hour CRT to fifteen-minute entry, one-hour CRT to five-minute entry.
Keeping this alignment consistent helps you avoid dropping too far down and entering from unnecessary noise.
CRT becomes even more useful when combined with additional confluences and proper timeframe alignment.
The key process is simple. Identify the CRT sweep.
Wait for the close. Define the CRT target.
Drop to the aligned lower timeframe. Find your entry and manage the risk.
If you found this breakdown useful, like the video and subscribe for more trading frameworks.
I'll see you in the next one. If you want to increase your chances at being profitable, join my free seven-day masterclass link in description.
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