News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • House Financial Services Committee schedules second GameStop hearing for March 17 - BBG $GME
  • Speaker Pelosi says minimum wage increase will not be removed from House Covid bill - BBG
  • Asia-Pacific equities opened broadly lower amid a 'risk off' sentiment following a sour lead from Wall Street overnight. Rising yields and a stronger US Dollar exerted downward pressure over risk assets. https://www.dailyfx.com/forex/market_alert/2021/02/26/Dow-Jones-Falls-on-Rising-Yields-ASX-200-Nikkei-225-Tumble-.html https://t.co/3p7prANkLA
  • The Australian Dollar looks poised to outperform the haven-associated US Dollar and Japanese Yen. However, it may lose ground to the New Zealand Dollar. Key levels for AUD/USD, AUD/JPY and AUD/NZD.Get your $AUD market update from @DanielGMoss here:https://t.co/cuxRxl5WaF https://t.co/MD0ppnO7t6
  • RT @FxWestwater: $NZDUSD, $NZDJPY React as Soaring Treasury Yields Skew Market Risk Profile Link: https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2021/02/26/NZDUSD-NZDJPY-React-as-Soaring-Treasury-Yields-Skew-Market-Risk-Profile.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr $TNX https://t.c…
  • Biden authorized strikes on Iran-backed militant groups. Strike was in response to attacks on US, coalition forces -BBG citing DOD #CrudeOil
  • The commodity-sensitive Canadian Dollar may continue outperforming its major counterparts in the coming weeks. USD/CAD, CAD/CHF, CAD/JPY and EUR/CAD key levels to watch. Get your market update from @DanielGMoss here:https://t.co/KYdUv2lpFC https://t.co/ZZUJ4AZEhc
  • Market Snapshot: Risk aversion is deepening as Friday APAC trade gets going $NZDUSD and $AUDUSD sinking Following declines in #SP500 and #Nikkei225 futures #USD broadly higher, anti-risk Japanese #Yen as well US 10-Year Treasury rates remain higher https://t.co/gQ50vS73P0
  • RBNZ's Orr: To consider settings against types of home lending, financial stability policies can help government housing objectives -BBG
  • RBNZ's Orr: Only focused on inflation, employment targets -BBG
Range Trading Basics

Range Trading Basics

Walker England, Forex Trading Instructor

Talking Points:

  • In the absence of a trend, trade market ranges
  • First identify key levels of support & resistance
  • Manage risk with a stop, in the event that price breaks

Many traders consider themselves trend traders. But what happens when the market loses its direction? Instead of being deterred by sideways price action, traders should develop a plan of action for ranging markets. Today, we will review how to identify a trading range, and an easy way to approach trading trendless markets. Let’s get started!

Find The Range

The first task of range trading is to find the range! This process can be easily done by connecting a series of highs and lows with a horizontal trend line. The key is to find two points to connect on your graph. Once found, these values can be extrapolated to form a line of resistance and support, with the area in between defined as our trading range.

Below we can see an example of an active range on the EURJPY. Resistance has been formed by connecting two previous highs near 141.50. Likewise, support has been defined by connecting a series of lows near 140.60. The distance between these two points is a respective 90 pips which the range trader will look to take advantage of as long as support and resistance remain in place.

Learn Forex: EURJPY 30Min Trading Range

Range-Trading-Basics_body_Picture_2.png, Range Trading Basics

Planning an Entry

Once levels of support and resistance have been found, traders can begin planning to enter the market. One benefit of range trading is that traders can take a non-directional look at the market and place both buy and sell orders. Since price is moving sideways, orders to buy will be placed as close to our support line as possible. If price reaches resistance, the same stance can be taken but this time range traders will have a preference to sell the market.

Traders can set entry orders near support and resistance, or even trade with market orders. If you have limited time to trade, entry orders would be the preferred method of range trading. Entry orders will remain pending until price touches the designated level, prior to execution. Market order traders may use a system of confirmation before entering. Confirmation signals may include identifying a candle pattern or incorporating an oscillator signal prior to entering the market.

Learn Forex: EURJPY 30Min with Range Entries

Range-Trading-Basics_body_Picture_1.png, Range Trading Basics

Manage Risk

As with any trading plan, range traders need to consider risk. The major risks associated with trading ranges, comes from a potential breakout of support and resistance. In the event that support breaks, any buy positions should be vacated. As well, if resistance breaks, traders should consider the range invalidated and exit any sell orders. This process can be handled through the use of stop orders beneath levels of support or above key points of resistance.

Now that you are familiar with the basics of range trading, it’s time to practice your new skills. You can get started identifying and trading ranges with a Free Forex Demo with FXCM. This way you can develop your trading skills with the market in real time!

---Written by Walker England, Trading Instructor

To contact Walker, emailinstructor@dailyfx.com. Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list,CLICK HEREand enter in your email information

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

DISCLOSURES