Power Course Instructor’s Response:
Good question...
You will generally see the trend begin to flatten out and begin to trade within a defined and repeated level of support and resistance. We would like to see this on a Daily and/or 4 hour chart...a range on "minute charts" is not established enough to trade without a greater element of risk.
Ideally, one would want to see three touches of support and resistance by price before declaring a range to be in place. A more aggressive trader may be willing to accept only two touches of support and resistance by price action.
To trade a range, a trader would go long at support with a stop just below support or short at resistance with a stop just above resistance. The higher probability range trades will be those in the direction of the overall trend on the Daily chart. Also, when price action breaks out of the range, the breakout will likely (although no guarantees) be in the direction of the trend.
See the chart below for some additional info...
