How to confirm that the market is sideway?

Hi friends, can anyone help me? If you would like, please share what methods you have used so far to detect sideway in the market. Thank You.

Hi, This is timeframe dependent. I have included a chart of FTSE index that moves sideways for most of last year then starts a long trend into Apr2024. I would describe this market (after the event) as sideways between 7400 and 7800 until mid Mar2024, then trending long Apr24 to now…

However if you zoom in you will find the following date ranges that exhibit trending long markets. If I were to trade FTSE (which I do not) I would probably look to use a trend following strategy, and look for trend establishment for at least a week before committing a trend following trade. I do not use range strategies, except long term with low value crypto currencies that have past pattern behaviour.

1Dec23 to 2Jan24
17Jan24 to 31Jan24
13Feb24 to 23Feb24
19Apr24 to 10May24

hi, maybe you can ask yourself other question, where are price levels which give me higher chances to break and continue price move? ( I assume you want to use breakout strategy) Regards Greg

As the members above imply, the strategy you choose drives everything.

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You only confirm market is ranging or in a consolidation after the fact. The only exception is when you can see the future.

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My strategy might be too simple but that works for me. If the 3 recent highs (at least 3) are higher than when we go forward in time, and also the three recent lows are being formed higher, the trend is bullish, if this happens the opposite way, the trend is bearish, if none of these happen, it is side way. the only tricky thing is that you should not consider fake breaks (or as some may call it, failed breaks).

Exactly. Trends and consolidation can only be seen after the fact. In the present there is no way to know when they will start or when they will end.

Hi I’m Lawal I really need mentorship on technical analysis

The fundamental determinants of trend in Forex are the currencies EUR, GBP, AUD, NZD, USD, JPY, CAD, and CHF. These currencies form 28 currency pairs, with each currency being used in 7 pairs.

If the sum of the left sides of these 28 pairs is x, then the sum of the right sides is -x. Just like how the daily percentage changes of these 8 currencies sum up to zero, the sums of the left and right sides of the 28 pairs also equal zero. This is the way to find the real trend in the forex market.

While the movement of one currency against another in a single pair can be deceiving, the aggregate trend of 28 pairs is much more stable.

Trading based on the aggregate trend of 28 currency pairs can provide insight into whether it’s more accurate and likely to open trades on rising or falling pairs throughout the day. Even though there’s no EUR on the right side when there’s a JPY on the left in these pairs, this balance is deliberately established. This balance cannot be achieved with 27 or 29 pairs. IN FACT, TRADING DIRECTLY ON 29 PAIRS ACCORDING TO THIS TREND, SIMULTANEOUSLY BUYING OR SELLING, IS A MUCH STRONGER METHOD THAN TRADING ON A SINGLE PAIR.


Hey there! To spot sideways markets, I usually look for a range-bound pattern on the charts where the price fluctuates within a tight channel.

Yes, Identifying sideways markets is crucial for trading decisions. Some common methods traders use include analyzing price action to spot periods of low volatility, observing the behavior of key technical indicators like moving averages or Bollinger Bands, and looking for patterns such as consolidation or ranging. Monitoring volume levels can also provide insights into market activity during sideways movements.

Like others said, trends and consolidations can only be seen after the fact. But, as they develop, you can get a hint by simply checking your oscilators.

If price’s movements closely match the readings (it goes down after hitting overbought area and vice versa), you’ll know you’re in a sideway. Also, oscillator divergence’s effects are more pronounced in a sideway. A divergence in a trend is usually followed by a retracement, while a divergence in a sideway is followed by a reversal.

Cheers.

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yup, i agree on this one.

interesting, tell me @Mondeoman do you use multiple time frame to look for trend establishment?

Hi @ProfesorPips, what do you suggest to pinpoint that level?
I’m learning about following trends. With this method, I see that sometimes the market seems to be going sideways but it turns out it’s just a retracement before it continues the trend. So I think I need to learn a method to confirm whether what is happening in the market is sideway or just a correction… I need this confirmation in making decisions, especially if there are open orders.

@tommor i do agree :slight_smile:

@Torchwave, oh no, i just wanted to know is it possible to confirm wether this is sideway or not, i’m not in to forecasting…

@PrestonRiver, hi, thank you for sharing your strategy :slight_smile:

@EmeraldEyes yup, i’m on your side on this…

Hi @biglawal, you are lucky then, there is alot of senior trader in this forum, you could ask to them, same with me, currently i’m try to learn the technical analysis.

@FX_KaiZen, Hi Bulut :slight_smile:

Hi Jordan.B thanks for the tips! :wink:

Hi @merryhenson, thank you i feel like i read wikipedia :)) thanks for sharing!

Hi @flows, thanks for the tips, what oscilators do you suggest?

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Yes. Not in all my strategies, but mostly I am a twend following guy. The twend is your fwiend.

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Obviously a ranging market is easiest to confirm in hindsight. What I do to identify a ranging market as it develops is watch for alternating bullish and bearish Imbalances (aka Fair Value Gaps).

If price is trending up there usually will be bullish imbalance formed in the impulsive wave and that imbalance is usually respected and bearish imbalance when trending down which is also respected.

But when price is ranging there is often alternating bullish and bearish imbalance and both types of imbalance are violated because no one is truly in control.


Bullish and Bearish Imbalance Alternating

Once I see alternating imbalances that get violated and confirmed by not having a break of structure, I assume that the market is entering a range or in a range until a true breakout or breakdown occurs.

You are most welcome.

I have an out-of-nowhere question! could this picture be assumed as a head and shoulders pattern? because it has worked like one and it almostttt looks as one

Any oscillator with oversold and overbought area will do. Here’s some comparison:

The price movements in the line chart is almost identical with the readings, and divergence will signal reversal that bring price to the upper or lower range.