Written by Dhiresh Dabasia

This article will introduce the concepts of ranging conditions and trending markets, as well as how they can be defined, identified, and used to enter a trade.

Ranging conditions:

Ranging conditions are defined by the price moving between short, or medium, support and resistance level, meaning it will go up and down between these two levels and display horizontal movements, thus stabilizing. Trend traders cannot profit from such a market, but range traders would as they would continue to assume that the price would trade through the same levels many times and enter traders accordingly. An example of a ranging pair is shown below.

In the chart above, the price trades mostly within the blue box displayed. As the cryptocurrency market is highly volatile, range trading is strongly discouraged. Traders should not take buy or sell trade orders when the market enters such ranging conditions on timeframes below and including 4H.While ranging conditions are far from ideal for taking trades, if a setup presented itself before the price entered such conditions it is imperative to remain patient, keep the position and place stop losses strategically whilst managing risk properly.

It is important to know a ranging market is one which it stuck in a horizontal box range. It should not be mistaken with one which is in upward or downward channels as these conditions are described as trending.

Trending market:

As opposite to a ranging market, a trending market presents either higher highs and higher lows, also named bullish market, or lower highs and lower lows, also named bearish market. Trending markets are easy to identify as they have a clear direction, going either up or down, and give traders great risk/reward trades. An example of a trending market is shown below:

In the example above, clear lower highs, shown by the red arrows, and lower lows, shown by the green arrows, are visible, which is characteristic of a bearish market. Furthermore, as the pair is trading within a falling wedge and the pullbacks occur after the lows, traders should only take shorts whilst the market remains in these conditions.

We hope you have learned a lot in today’s article and will integrate it in your trading strategies to enter the best trades possible. Make sure you follow us for more content!

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