This saying TRENDING AND RANGING MARKET signifies that as a trader, one must always look at historical price movements to study the behavior of buyers and sellers which leads him to take the best possible course of action. Hence it is very important to study this chapter to learn to identify whether the market is trending or ranging, ie, whether it is in uptrend, downtrend or sideways trend.
Ranging Market
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TRENDING AND RANGING MARKET
When we talk about trading, there is a well known saying “Trend is Your Friend.”
This saying signifies that as a trader, one must always look at historical price movements to study the behavior of buyers and sellers which leads him to take the best possible course of action. Hence it is very important to study this chapter to learn to identify whether the market is trending or ranging, ie, whether it is in uptrend, downtrend or sideways trend.
Before we proceed further, let me tell you that when markets are trading in an uptrend or a downtrend it is said to be a Trending Market while when it trades in a sideways trend it is said to be a Ranging Market.
What is Trending Market?
A trending market is generally when you see prices moving in one direction (either up or down).
A trending market will have small correction or pullbacks (retracements) but when you look at the larger picture (longer time frame) you will see the market going in a defined direction.
There is no specific time frame to identify a trending market, you can use any time frame like Daily, Weekly Monthly depending on your trading type and style (ie scalping, intraday trading, swing trading, positional trading, short term trading, long term investing, etc) However, always keep in mind, the higher the time fram you use, the better the trend will look.
Trending and Ranging markets easier to spot
The market is said to trending in an upward trend when the price of a security makes a series of Higher Highs and Higher Lows (HH&HL Structure).
Similarly, the market is said to be trending in a downward trend when the price of a security makes a series TRENDING Structure).
