Post of the Day:Trends and Ranges

[B]Student’s Question:[/B]


I have heard that currency pairs are either ranging or trending. How does that look on a chart? Thanks.

[B]Power Course Instructor’s Response:[/B]


Good question…

After a currency pair has a trending move, it will generally “bounce around” testing a support level after a down trend or testing a resistance level after an uptrend. If the level in question holds, the price action can then begin a trending move in the opposite direction.

Take a look at the chart below…

Initially we see the downtrend and we notice that it come to a halt at around the 1.1875 support level on this chart. It trades in range of about a 100 pips, tests support again and then begins a bullish trend to the upside.