RANGE TRADING FOREX

Range trading comes to mind when looking at the EUR/USD fluctuations in the weeks of November 9 and November 16 when it traded between 1.48 and 1.5050. The range pattern implies that the exchange rate is bottoming out and peaking multiple times within a specified range.

Automatic
Foreign Exchange Trading Using EXPERT Signals
of Your Choice,
ALL FOR FREE

Such range patterns can be used by forex traders to apply profitable strategies by taking long positions at the bottom of the range and short positions close to the top of the range.

This strategy is more easily applicable if the highs and the lows of the range pattern are consistent allowing the trader to more easily identify such turning points and apply the most appropriate strategy.

In technical analysis, the low point of the fluctuation is referred to as support level, in the sense that the price is supported at that level and will prevent further decline, while the high of the fluctuation is referred to as resistance level in the sense that there is resistance at that level to any further upward movement.

Thus, range trading involves identifying the relevant support and resistance levels and repeat the process of buying at support levels and selling at resistance levels until the exchange rate brakes out of the range. Of course the risk of losses is lower as long as the exchange rate stays within the identified range but it could be quite larger if it breaks out of the range.

Will EUR/USD continue trading within the range of last two weeks on the week of November 23 or will there be a breakout and if yes towards which direction?

According to http://www.forexcrunch.com this will depend on several news and events that will take place next week including among others the announcement of German, French and European flash PMIs on Monday, November 23; a Jean-Claude Trichet speech on the same day; German Final GDP, French Consumer Spending and Belgium NBB Business Climate announcements on Tuesday; German Preliminary CPI and M3 Money Supply on Thursday; and Consumer Confidence that will be published by Eurostat on Friday.

If you have an interesting comment in relation to this article please use the form below Related Posts to submit it. Please read submission guidelines before writing and submitting your comment.

Search Our Over 400-Page Website!