Non-trend trading range
analysis and
stock market strategies
You need to know when a stock is not in
uptrend
or
downtrend
. Such situation is named trading range.
This situation can be found when stock finishes its strong trend move. Investors are closing their positions. That means that last leg of uptrend or downtrend is finished by strong and huge pullback. Such pullback can be measured by
Fibonacci retracement
levels as important trend-reversing pullback (above 60% pullback move). Also such pullback is accompanied with huge trading volume. As you can know,
strong volume
after strong trend often signalize important
top
or
bottom
in price.
Stock market trading tip
The best of stock market strategies for such stock price environment is to avoid trading stock which is inside of price range.Generally stock is moving sideways between two significant levels of
support and resistance
. Easiest way to identify this situation is see it at chart. Like at this example:
You see that price is moving without any significant trend. There is not easy to find higher high and lows. Price is crossing
moving averages
up and down too often. Also volume cannot provide any additional hint. You need to be sure that you know what you can expect that stock can do in near future to do profitable trades. You are not able to tell it with such stock chart. So you have to avoid trade such stock until it breaks out from this trading range.
Ideas for range stock market strategies
If you want to include some range trading strategy into your
stock trading system
then I have some recommendations for you.First be patient. Wait for price to reach and touch support or resistance of such range. Then wait again for
reversal candlestick
it can show you that price has tendency to pullback from such important level. You have to use very
tight stop loss
for such trade as you never know if the price is going to break under or above such price range.
Return from Non trend trading range to stock chart analysis
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