What is the best method for identifying a currency is range trading? I am asking for the purpose of a system. I indend to work out a solid ratio of TP/SL and provide entry when price action reaches a certain percentage of the total range.
Had a slow day with trending systems because of range trading and wanted to work on an alternative system for days like today.
Thanks for any suggestions!!
Perhaps the easiest way is to open a blank chart, no indicators or anything. If the market is moving sideways it’s ranging. Look for price to break the lower or upper bounds, this means that a new trend may be starting. Heikin-Ashi candles can help show you the trend as well, if you see if a mix of the 2 candles that usually means ranging.
someone asked me that recently. I didn’t think of the HA candles. That’s a good idea.
Heiken Ashi always looks so simple and accurate on a chart, but when you look very closely, you will discover it is deceiving. That is because it is looking backwards and tells you what happened. It will often should a trend after it is over and when the prices are ranging it will whipsaw. I still think a trained set of eyes will do better than any indicator.
I said they help, not give a clear, definite indication of ranging conditions.
I don’t know if I can post links yet, but have a look at this article it should help you understand what to look for.
Thanks Forexdawn. I’ve seen all this before but its exactly the thing I needed. The bit on confirming a bias change was a big help with some other stuff as well.
PA wise, if you’re in an up trend watch the swing highs and lows. It should be making higher highs and higher lows on the swing points.
Once that pattern is broken that’s the first sign of the end of the trend. If that pattern doesn’t soon begin in the opposite direction, good chance of a ranging market.
EDIT: I just noticed that someone already posted a link with more detail on this type of analysis…good stuff, keep it simple.