We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • The Australian Dollar and New Zealand Dollar tend to rise with stocks. They have recently fallen despite gains in the #SP500. What does this mean for $AUDUSD and $NZDUSD ahead? #AUD #NZD #RBA #RBNZ - https://www.dailyfx.com/forex/fundamental/article/special_report/2020/01/17/AUDUSD-NZDUSD-Outlook-Looks-Past-Stocks-to-Rate-Cut-Bets.html?CHID=9&QPID=917702 https://t.co/ddf2fV7Kyl
  • A few snippets from today's commentary. Check out the link below for the full story (via @DailyFX). https://t.co/I31tuq764r https://t.co/x0BaiOFA1P
  • Have you joined @DailyFX @facebook group yet? Discuss your #forex strategies and brush up on your skills with us here: https://t.co/jtY1G7g8yx https://t.co/e2YrN3dBrl
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.00%, while traders in France 40 are at opposite extremes with 79.59%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/UL7hqSD2Ki
  • US Dollar Forecast: $USD Lacking Impetus Ahead of Consumer Sentiment #Forex traders shift focus away from US-China trade deal headlines - perhaps toward the monthly release of #ConsumerSentiment data for volatility and clues on the Greenback's next move https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2020/01/16/us-dollar-forecast-usd-lacking-impetus-ahead-of-consumer-sentiment.html
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.11% 🇦🇺AUD: -0.02% 🇯🇵JPY: -0.03% 🇨🇭CHF: -0.05% 🇬🇧GBP: -0.06% 🇨🇦CAD: -0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/Kxcb9EtIWb
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.45% France 40: 0.26% Wall Street: 0.07% US 500: 0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/I5YIsKQAog
  • 🇯🇵 JPY Tertiary Industry Index (MoM) (NOV), Actual: 1.3% Expected: 1.0% Previous: -5.2% https://www.dailyfx.com/economic-calendar#2020-01-17
  • The $JPY has weakened as a bounce-back in risk appetite saps haven-asset demand. However, the old uptrend line still provides clear resistance. Get your market update from @DavidCottleFX HERE:https://t.co/IMhgQ9jbF9 https://t.co/I7087olftk
  • Heads Up:🇯🇵 JPY Tertiary Industry Index (MoM) (NOV) due at 04:30 GMT (15min), Actual: N/A Expected: 1.0% Previous: -4.6% https://www.dailyfx.com/economic-calendar#2020-01-17
How to Analyze Ranges with RSI

How to Analyze Ranges with RSI

2017-02-10 18:00:00
Walker England, Trading Instructor,
Share:

In between times of market volatility, traders may find extended periods where markets are trading sideways. These periods are defined as a ranging market, and develop graphically when prices trade between established levels of support and resistance. Below we can see an example of anongoing range for US Crude Oil. Our pertinent price points include resistance at current highs near $54.50 and support at a price level near $51.50. With these areas defined we can then proceed with a trading plan to trade these pricing levels. For this we will once again turn to the RSI oscillator.

How to Analyze Ranges with RSI

(Created with IG Charts)

Yesterday we discussed using RSI in trending conditions. But the truth is, that RSI can be used just as well in a range. In a ranging market we want to time our entries when support / resistance points line up with RSI and overbought / oversold conditions. Timing is key, and we can see on the graph below that the previous trading signal allowed us to sell resistance as RSI moved from overbought levels. As price declines traders can look for a fresh signal to buy the US Crude Oil at support if RSI becomes oversold.

The great thing about ranging markets is that you do not have to have a specific market or trend bias. Traders have the ability to trade the range until price breaks out from support and resistance levels. Due to the possibility of a breakout, range traders can use half the distance of the current range to ass potential stop levels. In this example traders may elect to keep a minimum stop of $1.50 from their point of entry.

How to Analyze Ranges with RSI

(Created with IG Charts)

By using a stop that equals half the distance of the range, traders may then extrapolate a 1:2 or better Risk/Reward ratio for their trade. This step is important, because in the event of a market breakout traders should elect to close out any existing range based positioning.

Next: Trading Tokyo Ranges with Price Action (32 of 50)

Previous: Trading Commodity Correlations

--- Written by Walker, Analyst for DailyFX.com

To Receive Walkers’ analysis directly via email, please SIGN UP HERE

See Walker’s most recent articles at hisBio Page.

Contact and Follow Walker on Twitter @WEnglandFX.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.