The Defining Range (DFR)

In this one we cover a Quarterly Theory concept called the defining range, or the DFR. I haven't seen anyone speak about this, so it may be new to you. It's great for understanding where price will manipulate and distribute, how to catch trades with it, and how to use it as confluence with the model you already trade.

What it is

All you do is split Q1 of any cycle into thirds. Any cycle — weekly, daily, 90-minute, micro, monthly. You look at Q1 only of that cycle, then ignore the first third.

So divide Q1 into three. If it's the daily cycle, Q1 is Asia range — 6 hours long. Divide by three: 2 hours, 2 hours, 2 hours. The 90-minute Q1 divides into 30, 30, 30. Ignore that first third.

For the daily cycle (Asia range, 6pm–midnight), Q1 split into three is 2 hours each. Ignore the first two hours — so look only from 8:00 PM to midnight (the final two-thirds). Then mark the highest high and the lowest low of those final two-thirds. Not any other high or low — the very, very high and the very, very low. That's your defining range.

Having the cycle quarters automatically plotted makes finding Q1 fast — the QT Cycles indicator at oracleindicators.com marks every quarter divider across every cycle.

Anchor a standard deviation

Once you've found your defining range, anchor a standard deviation to it. Settings run from 0 up to 2.5, with negatives down to -2.5. Anchor from the highest high to the lowest low (or low to high).

Manipulation levels: the best manipulation takes place between 0 to -0.5. Anywhere between 0 and -1.5 is okay too. If a cracking correlation aligns with the manipulation level, it makes the manipulation higher probability. And if that manipulation level aligns with liquidity — which it generally will (the Asia low, for example) — then price takes out liquidity, forms a cracking correlation between 0 and -0.5, and that's the perfect trade.

A cracking correlation can be a Sequential SMT, a PSP, or an SMT Fill — and it can be on a higher timeframe too. You can mark the defining range on the 15-minute (daily cycle) but get a 1-hour SMT Fill between 0 and -0.5 of the DFR on the 15-minute, and that's completely fine. Personally, if I'm using the defining range, I'd look for a Sequential SMT at that level.

Distribution / target levels: once the manipulation has formed, target the distribution level. Price often expands to the 2 to 2.5 level. Even higher probability if 2–2.5 aligns with liquidity (previous session highs, previous day highs). It can come a little below or above — these are just the general high-probability areas from backtesting.

Why "Monday defines the range"

Once Q1 has opened, this is why people say Asia / Monday defines the range. Monday sets the stage for the week because you can use Monday's range to project these manipulation and distribution levels, then look for cracking correlations that align with them, and trade with confidence in where price will go and manipulate.

This won't work 100% of the time — use it as a confluence with your existing model, or to help set targets if you struggle with that.

On the charts

On the 5-minute (90-minute cycle): a 90-minute SMT between Q1 and Q2, with the DFR applied to Q1, makes the setup higher probability. The 90-minute quarter is 90 minutes, so ignore the first 30 minutes — if the quarter starts at 6pm, mark from 6:30 to 7:30. Mark the high then the low. Looking for price (if bullish) to manipulate between 0 and -1.5, ideally 0 to -0.5 — which it does, forming the cracking correlation (an SSMT with YM). Then distribute to 2–2.5, looking for liquidity to line up. Notice the manipulation quarter (Q2) doesn't deliver straight to 2–2.5 — the following quarter (Q3) distributes to the target, which is the normal sequence. Q4 then continued after Q3 distributed.

Key Takeaways

• Split Q1 of any cycle into thirds, ignore the first third, and mark the highest high and lowest low of the final two-thirds. That's the defining range.
• Anchor a standard deviation (0 to 2.5, with negatives) from high to low.
• Manipulation zone = 0 to -0.5 (acceptable to -1.5). Best when it aligns with liquidity and a cracking correlation.
• Distribution target = 2 to 2.5, best when it aligns with liquidity.
• "Monday/Asia defines the range" — Q1 sets the levels that project the rest of the move.
• The manipulation quarter usually doesn't hit the target; the following quarter distributes to it.
• Use it as confluence with your model or for target-setting — not a standalone 100% system.