Trading Range Definition & Trading Strategies

Typical characteristics of Trading Range Market:

• No-Gap Opening or Gap opening in yesterday’s range
• Day start with Doji bars / overlapping bars
• Multiple early reversals in 1st hour
• Relatively big opening Range (more than 50 % of ATR)
• Prior few days are sideways days
• Several changes in the direction of the move (Sense of uncertainty, 50-55%)
• Mostly, overall price action is Horizontal
• Move to continue with a lot of overlapping bars
• It looks like the range is about to BO, but it fails most of the time
• Sharp reversals near Top and Bottom of Trading Range (vacuum effect)
• EMA is relatively flat
• The market runs the stops repeatedly
• Most of the patterns are Trading ranges

Additional essential points while trading in Trading Range Market :

 Most Trading Ranges are continuation patterns
 Most reversal patterns are trading ranges
 Longer the TR continue, greater are the odds that it will become a reversal pattern.
 It is usually a trend resumption setup of higher TF
 Rallies tend to be stronger than the pullback in TR in the bull market especially when TR near ends
 Regularly, next day follow through with TR
 80% of the time, Trading Range Breakouts /Breakdowns fail

Trading Strategy in Trading Range Market:

 Buy low- sell high (BLSH) setup to trade (Trading Breakout Failures (or) 2nd Signal Trade at Trading Range Boundaries)
 Try to Scalp (1 R profit). If the trading range is big, try to swing part positions.


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