Forex Trading Range and Trading Trend

Posted by on Nov 8, 2012

By Fabiano Trevisiol


Forex Trading Range and Trading Trend

 

In forex or generally in any financial market, the chart has 2 major States, and it’s important to know them to work with your own forex trading strategy.

  • State of the market trend

  • State of the market in range

It is very important for your forex strategy know how to locate these two States, and this concept is taught in any forex trading course, because knowing these market conditions, we can avoid making serious misjudgments in the execution of our trades.

 

 
State of the market forex in trend

In this situation, the market has a precise direction, usually the junction between the ema21 and the ema8 took place at the beginning of the trend and the 2 moving average tend to stay pretty far away and not ever touch or at least rarely. At this stage of the market, which can be bullish or bearish, especially waiting times when price retraces slightly then in favor of the trend in case the candles show that the temporary motion retracement is running out.

 Let see an important concept.

 

The retracement

 The retracement is a temporary reversal compared to the general direction of the price, this condition often occurs because the price when travelling by a trend, never does in a straight line, but sways away and moving closer to the moving averages, then goes away again. These small retracements, these brief reversal of situation, may also be called FLAG, given the graphic similarity with the appearance of a flag.

For more information about moving averages, I wrote a tutorial that explains very well, here,on this site there is a free forex course which we are developing and you can follow by visiting from time to time the site.

When we are in trend, the best way to trade is to identify the times when these short movements opposed to main direction are ending, and then enter the market trends, this is the basis of any forex trading strategy. Let’s see a few examples.

 

 

Example of a bullish trend.

uptrend example trading forex

 

Example of a downtrend.

downtrend trading forex

 

Please note that at the end of the flag or retracements, candles are formed with a very pronounced shadow, these candles are call pin and are a classic signal of price action, however we will see better in the future along with other signals that it is useful to know for trading the markets.

 Stato of the market in range .

When the market is in range, or side, meaning it does not assume a general direction upward or downward, but it moves horizontally in a kind of stalemate, bouncing between a minimum and a maximum, which are usually key levels (support and resistance) very strong and perfectly visible and defined, between these two levels it says there is a sideways Channel

In these cases, we can completely ignore the State of moving averages, why continue to interbreed continuously upwards and then downwards. What an experienced trader in this market should do, is sell when the price is at the top of the side channel and buy when the price is located in the lower part of the Channel.

 

 

Let’s see a few examples.

 

trading range forex

forex range market

For this lesson is all about.

Good trading!

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