Learn Simple Yet Powerful Price Action Trading Strategies That Will Transform Your Trading Knowledge & Results
Ranging Price action :
Now this is where the chart can become interesting. By using the price action counting of the swing highs and lows we can know at a very early stage IFprice is going to start to develop range bound activity.
• Price is not making new highs OR new lows I don’t mean all time highs/lows or new day/week/month highs/lows… just simply a new chart swing high or low. Price will start to stall and not make a new swing high/low and typically will stay contained within the last swing high and low that was made on the
chart. Isn’t that a simple definition?
Range rule definitions :
• Price doesn’t make a new high or low on the move
• If price stays contained within the last swing high and swing low to be made,
price will remain range bound until it makes news move highs or lows.
• Price confirms the range when a lower high and a higher low is made within the
previous swing high and low.
In the chart below you can see that from the left side of the chart price is making LH’s & LL’s all the way to the first blue arrow which in real time would be the latest lowest low.
Price then moves higher to make a HH. These two swing levels have been highlighted.
At the point of the chart, in real time, price needs to either start moving higher past the last swing high (red Arrow) making a new high OR move lower past the last swing low.
Range considerations :
Some considerations for identifying ranges at an early stage in real time are;
• That price could be creating a pullback or bias change and as the chart unfolds for you a new high or low could be made voiding the potential range.
• There are several definitions of a range one of the more common ones is that you are looking for a double touch of support and resistance. For me this is a little too late in the game as price may not create the double touch as in the example above.
With this price action method you can identify the possibility of a range developing VERY early without having to worry IF price does or does not give you the double touch. As you can see with that definition you would interpret that price is not range bound at all but, you can clearly see visually that price is moving sideways without any definition.
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