Forex Price Action Basics - Lesson 4: Ranging Markets

 

Previous lesson, Trending Markets...

 

In the previous Forex Price Action Basics lesson we covered the basics of trending markets, more specifically the basics of uptrends and downtrends. This lesson will cover the basics of ranging markets - when price moves in a general sideways direction in the Forex market. 

 

You may be wondering why all of this is important but all will be revealed. This is going to sound a lot easier than it is but making money trading Forex (and hopefully a lot of money) has a lot to do with identifying price ranges and price trends, and opening trades (positions) accordingly. More will be revealed soon...

 

 

What is a ranging market?

 

A ranging market is when a Forex pairs price is moving in a sideways direction. Unlike trending markets that are a series of swing highs and swing lows, ranging markets are when currency price moves between 2 price areas of the market but in a general sideways direction.

What does price look like when it trends?

 

When a Forex pair is ranging, price moves up and down between an upper and lower area of the market but in a general sideways direction. Below is a 4 hour price chart of the AUD/USD, do you notice how price is moving in a general sideways direction? 

Do you also notice how price is moving between a clear upper and lower area of the market? Perhaps the next chart (below) will help, we have marked these areas for you...

 

These lower and upper areas of the Forex markets do have given names; support and resistance. Support is an area in the Forex market that price evidently is "held up". Support is under current price and supports price. Resistance is an area in the market that evidently "pushes" price down. Resistance is above current price and acts as a resistance or barrier to price. Perhaps the illustration and video below will make this clearer...

Resistance

Support

Watch this lesson in Video...

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