Thanks for sharing your observations on this setup. Giving my view to continue the discussion..
I have noticed that NR's usually occour at the top or bottom of a channel. While NR breakouts can happen on either sides I have noticed that there more often than not the NR breakout happens opposite to the preceding trend. When range narrows during the up move then usually it's a breakdown. Another supporting observation is that many a times if there is going to be a BO/BD from the channel NR is not seen on the BO/BD leg of the move.
NR is resting day and in my observation, it can be after a trend, giving advance sign a reversal.. OR it can also be a rest before continuation. I don't have any statistics to support it but my gut feel is that
the reversal signal given by NR7 are great.
As you have mentioned about NR in channel, it can be viewed as NR on higher timeframe chart. (the way last week we had apporx 125 points range which resulted in NR4 (missed NR7 by 3 pts) on Weekly chart .
Another way is to check the close of the NR day relative to tomorrows pivot (tomorrows pivot is calculated using todays HLC). If C is greater than H+L/2 then the pivot will be lower than close and viceversa. Basically stems from the belief that tomorrow pivot will provide support hoping the opening will be above the pivot.
Nice way of integrating Floor Pivot point in trading. In my view, because NR days are resting days/days of no clearity, hence doesn't have much market participation. And in such low action day, it is easy for smart players to move the market. Hence rather than depending on Calculated pivot number to take my trading decision tomorrow, I will prefer to respect the Low of NR day as good support point.
In my trading, if it is IDNR then, I go back by one more day to look at real support level.
These are some of the things I read which haven't been very successful for me with nifty. I usually watch for NR and ID on stocks for entries and exits. I'm just putting them up there so that someone else could build on these.
Developing 100% mechanical system is a challange from any profitable setup. But it is easy to use the knowledge of this setup to support your other trading decision.
(like after NR7, be prepared to chase the trend. After series of WS days, be prepared for narrow day and focus on booking profit at T1 or be ready with rangebound trading system).
Happy Trading.