When markets are flat, scalpers can trade ranges.
Traders should identify support & resistance before considering entries.
Range trading can continue until price breaks.
Scalpers have a variety of choices when it comes to an execution strategy. This decision should be decided after carefully evaluating current market conditions for the currency pair of their choosing.
For today’s scalping lesson, we will focus on ranges and how to trade them by planning entries between key levels of support and resistance.
Learn Forex – USDCHF Scalping Ranges with Cam Pivots:
Trading the Range
As a range trader our first task is to identify key levels of support
and resistance. This can be done through a variety of methods mentioned
in the 4th installment of the Definitive Guide to Forex Scalping. Once
traders have found these points and price is confirmed to be traveling
in a range, entries become very straight forward. Traders can set an
entry order to sell levels of resistance and buy levels of support. From
this point, scalpers must become patient and wait for the market to
turn at one of these designated points.
In the example below, we can see this technique in action. Support and
resistance have been found using Camarilla pivot points. Traders can set
entry orders to sell the USDCHF back in the direction of the primary
trend, near resistance at .9051. In the event that price touches these
entries, they will be executed selling the USDCHF. Risk has been managed
by placing a stop at the next line of resistance, designated as R4 at
.9068. Taking profit should be done when price has reached the opposing
point of the range. When selling a range, limit orders can be placed at
support. Conversely in the event of buying range support, price targets
can be set at range resistance.
Learn Forex – USDCHF Range Entries & Targets:
Ranges with Oscillators
Traders can also choose to scalp market ranges
through the use of an oscillator. Again traders should wait for price to
reach a key level of support and resistance prior to considering an
entry. Once this occurs, traders can turn to an indicator such as MACD,
CCI, or RSI to time their entry. In the event price touches resistance,
as highlighted below, traders will enter the market on a return from an
overbought level. This process can be replicated to buy levels of
support when Oscillators cross back above an oversold value.
Trading with an oscillator can potentially help trader’s better find
market momentum and even keep traders out of some bad positions.
However, it should be noted that this does not give scalpers license to
use sloppy risk management! Just as we would with our example using
entry orders, traders can manage risk by placing a stop above the next
line of resistance, while targeting range support to take profit using
limit orders.
Learn Forex – USDCHF Range Entries with CCI
It should be noted that ranges can be traded as long as support and resistance remain intact! In the event the currency pair you are trading breaks or begins trending, it will be time to abandon the range and either switch to a new chart or a new strategy.