Range Market and Its Application in Trading

A Range Market is a market condition where prices move between resistance (high) and support (low) levels. Specific trading strategies can be applied in this market condition to capitalize on limited price movements. Traders who employ range market strategies typically engage in short to medium-term forex trading, targeting profits of several tens of pips and spanning over a few days.

Identifying and Applying Range Market in Trading

1. Using Line Patterns:
   This method requires knowledge of previous high and low prices to determine resistance and support levels. Line patterns can be combined with candlestick patterns for deeper analysis.
2. Employing Market Moving Averages:
   In this method, the average price movement is calculated to determine how far prices move within a day. For instance, for the GBP/USD currency pair, the average movement could be 125 pips. By using this value, traders can determine resistance level (HIGH - 125 pips) and support level (LOW + 125 pips) to initiate trading positions.
3. Utilizing Daily Pivots:

   The pivot point technique helps traders identify support and resistance levels relative to previous market situations. Pivot points, along with other support and resistance levels, form regions where price movement direction may change. Professional traders often use pivot points to identify crucial levels in trading.

Essentially, these three methods aid traders in identifying significant levels within the range market that can be used as references for opening trading positions. By leveraging this information, traders can make better trading decisions and enhance their chances of success in forex trading.

Share: