Range-bound trading strategies involve connecting reaction highs and lows with horizontal trendlines to identify areas of support and resistance. The strength, or reliability, of the trendline as an area of support or resistance depends on the number of times the price has reacted to it. For example, if the price has moved lower off of the resistance trendline five or four times, it's considered more reliable than if the price only moved off of it two times.
A trading range occurs when a security trades between consistent high and low prices for a period of time. The top of a security’s trading range often provides price resistance, while the bottom of the trading range typically offers price support.
Traders capitalize on range-bound trading by repeatedly buying at the support trendline and selling at the resistance trendline until the security breaks out from a price channel. The idea is that the price is more likely to rebound from these levels than break through them, which puts the risk-to-reward ratio in their favor, although it's important to always watch for a potential breakout or breakdown.
Entry: after trendline breakout Target: upper range. Stoploss: Support
Confuluence to enter: Trading around support indicates cheap entry at current market price which will be confirmed after trendline breakout
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