Trading Ranges

Written by Edward Gonzales

August 22, 2021

Nobody has a crystal ball to tell them where the market is going or what a coin pair may do next. There are however some common trading patterns and setups that could potentially alert a trader of a profitable move. It is up to the trader to be able to spot them and act rationally in order to secure profits. The problem is and will always be that the markets are unpredictable. Identifying trading ranges allows for dynamic targets to be produced as a market unfolds. 

When considering trading ranges you must first have an adequate understanding of drawing valid trend lines as they are the base of the trading range projections. Once you understand trend lines you will be able to make more sense of the intersectional plays they present. The space between trend lines is what can be referred to as a trading range. When you have crossed one area or level of price action there is another level above and below to be considered. This area is where you can find opportunities. 

In the photo above we have outlined a few areas of recent price action. Each zone is labeled differently with different colors. In the next photo below we will observe area “1”.

The first zone presented multiple trading ranges, however at the time of its development it was not possible to see the larger uptrend channel being formed. Towards the end of this area is where we could have connected swing high points and swing low points to identify the larger uptrend channel. During this area of price action we could see smaller zones within the photo. Using them as support and resistance as price passes through is how you would use these zones as trading ranges. There are clear targets when you have trendlines to show your areas of possible price conflict. 

We can note a small bullish pennant being formed and it is positioned close to a larger downtrend line. If that pennant broke bullish (which it did) and continued to pierce that downtrending line (which it also did) then that would have indicated to us that we were leaving this trading range (for now) and entering another. The photo below shows the next trading range. 

Now that price has escaped the previous trading range we can try to plot the areas where price conflict may occur next. As we can see there are some interesting candlesticks forming around the horizontal purple line. Price had a few rallies to break over before it could sustain price action above that point. Now it is being tested as support. There is also notable rejection from the top of the uptrending channel lines. In this zone we see that it’s possible to trend down back towards the bottom of the channel. However we also observe that there is an upward pressure forming as well indicating to us ranges for trades. 

In the next photo we will project possibilities based on the ranges we have identified. 

This is not financial advice, this opportunity may even have been passed by the time this is published. That being said if one wants to long this setup a preferred entry would be around the $45,000 – $46,500 range (as this is an area of horizontal support) with a preferred target around the $50k range (as this is the top of the ascending channel line and a previous area of horizontal support resistance ahead).

Again not financial advice. If one wanted to short this setup the preferred entry would be about the same levels however the take profit price would be in the opposite direction. Knowing this we can observe the bottom of the uptrending channel to possibly intersect candlesticks around $44k – $45k. If there was a negative retest outside that line it’s possible to downtrend even further to the next previous level of support we tested not long ago.

This is how you can identify trading ranges within your trading charts. Let’s take a look at a few more perspectives. 

Now we have relatively the same candlestick information displayed in both photos, however one is more “clean” so to speak while one has many more lines and could be considered “messy”. Yet the composer of these lines may see the beauty. While one allows for a clear observance of the bigger picture, the other with many lines provides many ranges on smaller time frames. Below is a highlight of the most recent price action translated to a 15 minute timeframe. 

Within the smaller time frames lies the advantages of finding and labeling your trading ranges. Now this should be a bit more clear of opportunities within the markets. Generally as one trendline is approached and breached it is retested. If the retest is successful, the price will advance toward the next level of support/resistance. This happens over and over and over again. Mapping trendlines to identify trading ranges can be very beneficial to your trading game.

In any circumstance it can be difficult to predict price movements of a coin or asset. Visit our website to learn more about the trading opportunities presented by the cryptocurrency markets.

By viewing any material or using the information within this publication you understand that this is general education material and you can not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. Trading cryptocurrency has potential rewards, but also potential risks. You must be aware of the risks and be willing to accept them in order to invest in the markets. Only trade with funds you can afford to lose. This publication is neither a solicitation nor an offer to buy/sell cryptocurrency or other financial assets. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

Written by Edward Gonzales © Crypto University 2021

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