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Range Trading Explained
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Traders who are just beginning to get a handle on how the markets move, focus on the range pattern; one of the most popular price patterns in technical analysis. In a range, the price bounces from a lower horizontal line (support) and rebounds back down from an upper horizontal line (resistance). This creates a sideways or “trend-less” price movement, which is very appealing even for advanced traders, because when a trader looks at the range in hindsight or on paper, it looks like a very easy way to make money.
As long as this sideways price movement stays consistent, traders might potentially increase their profits by going long around the support area and short around the resistance area.
An experienced trader knows it’s not enough to trade only when prices reach support and resistance lines, most of the time additional confirmation is needed. In this situation, reversal candlestick patterns can be very effective to help confirm movements, and it’s something advanced traders will pay close attention to.
Here are some examples.
The Hammer As a very popular bullish reversal candlestick, the hammer consists of a small body in two colours (black or white), and a lower shadow that’s 2–3 times bigger than the body. The upper shadow is tiny or non-existent.
A hammer near the support line will signal a buy alert — a buy signal is triggered once the price exceeds the high of the candlestick. A protective stop-loss can be placed under the support line and similarly, a take profit order can be placed at the resistance level.
Sourced from: www.forexlasers.com/forums/forex-articles/4588-range-trad...
Range Trading Explained
via WordPress ift.tt/2GqDqdA
Traders who are just beginning to get a handle on how the markets move, focus on the range pattern; one of the most popular price patterns in technical analysis. In a range, the price bounces from a lower horizontal line (support) and rebounds back down from an upper horizontal line (resistance). This creates a sideways or “trend-less” price movement, which is very appealing even for advanced traders, because when a trader looks at the range in hindsight or on paper, it looks like a very easy way to make money.
As long as this sideways price movement stays consistent, traders might potentially increase their profits by going long around the support area and short around the resistance area.
An experienced trader knows it’s not enough to trade only when prices reach support and resistance lines, most of the time additional confirmation is needed. In this situation, reversal candlestick patterns can be very effective to help confirm movements, and it’s something advanced traders will pay close attention to.
Here are some examples.
The Hammer As a very popular bullish reversal candlestick, the hammer consists of a small body in two colours (black or white), and a lower shadow that’s 2–3 times bigger than the body. The upper shadow is tiny or non-existent.
A hammer near the support line will signal a buy alert — a buy signal is triggered once the price exceeds the high of the candlestick. A protective stop-loss can be placed under the support line and similarly, a take profit order can be placed at the resistance level.
Sourced from: www.forexlasers.com/forums/forex-articles/4588-range-trad...