How to identify the market type?

Can someone tell me how many market type out there? I found in babypips school that you have to identify the market before using any of technical analysis, right? But how?:rolleyes: There’s a term of trending market and rangebound, it is the one but what is mean? Please can someone explains more on this topic.

Thanks a lot…:smiley:

Eh! Trending means that the currency pair’s chart will either look like it is in an upward/downward sloping direction and it is fairly linear (however there will be some dips in it). Range bound means that it is stuck in a specific range. So the currency pair will go up touch a price then come down and touch a close price, go back up to around the same price, and fall back down around where it last went down to. There’s pretty much only two (rangebound and trending), however when the market isn’t moving barely at all (like range of 10-20 pips) I like to call it a quiet market and when it is around important news and the price jumps all over the place, I call that an erratic market. So Basically if it is a trending market you want your technical analysis to be in favour of that trend so you can follow it. If it is range bound, you want to sell when it hits that high price and buy when it hits the low price. Of course there are many successful people who don’t take into consideration “market environment”, but if it works out that you are successful with taking it into consideration, do it. Best to ya!

Probably the easiest way to judge whether a market is trending or not is just to look at whether it’s making higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend). If not, it’s most likely range-bound.

Keep in mind, though, that the situation can vary across timeframes. The market could be in a long-term uptrend, but experience a short-term downtrend, for example.

Ill agree with rhodytrader, just back off to a higher timeframe and is price moving upward or downward, or flat straight accross.
Always check the daily and 4hr.
That will tell you which direction to be looking for, But remember a flat market will end and so will a trend, so dont just sell and and go one direction or the other because of the longer term chart, follow your plan.