Ranges vs. Trends

It’s important to realize that charts aren’t always trending. A lot of times the Forex markets will be “ranging,” which means that they are going sideways instead of in an up or down trending motion.

Let’s look at an example.

rangevstrend

For 5 months the price really didn’t “go” anywhere. It just moved back and forth around the same level.

Ranging markets are good opportunities for trades based on S&R zones, but they are terrible for trendlines (since there are no clear, strong trendlines in a ranging market). If you try to force trendlines on your chart where none exist, you’re 100% guaranteed to enter a losing trade.

Now let’s take a look at a strong trending market.

ranging2

So what’s the point of all this? It’s to illustrate the point that you should not look for trendlines in a ranging market. If you do, you’re 100% guaranteed to enter a losing trade.

Now let’s go over one more important thing before we learn how to put it all together and start trading. First we need to learn when NOT to trade.

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