what's going on guys welcome back to my youtube channel and today we're going to talk about trading ranges because trading ranges can be very confusing and quite difficult to trade for a lot of beginners and a lot of new people because the beginner traders generally they like to see the market proven so when they see the market trending down like this they're going short directly in support and when they see market rallying up they're going along directly into the resistance and it's just a natural common thing because we like to see things proven before we
make a move so this is exactly how not to trade trading ranges and just to clarify and the trading ranges are characterized by a series of lows and series of highs and prices bounce in between those lines up and down up and down and the first thing i like to do when i'm trading trading ranges i like to plot this 21 bar ema this is just a supportive indicator to kind of get to feel to know this is a truly a trading range you can see how prices are swinging up and down up and all
through the ema but more importantly ema is constantly pulling prices closer to it so prices will not stay far far away for long enough far away from ema so this is why i plot the emi all right so the first thing i like to do when i'm trading trading ranges i like to identify the lows and the highs as accurately as i can and i found the highs fairly easily today because i use the previous day's price action you can see there's a key level forming right here and you can see it came into play
right right this day and for finding the lows i use these few bounces here so you can see this is a clear trading edge and as i came in it was already fairly obvious we are in trading range we made the move down made a room up made a move down so we are in a trading range so how am i going to trade this trading range that i know the prices are going up and down up and down well the main thing is to avoid trading in the middle in the middle this is a
no man's land and you cannot trade in the middle because most likely you're going to get chopped into pieces so the best thing how to trade is to fade the breakouts because most breakouts will fail irregardless what you have heard from a lot of people on youtube you know telling you buy or sell these breakouts no you have to trade them in the opposite direction because most breakouts especially in trading ranges will fail and that is the it is the hardest thing to do for for a novice trader but this is why it is so
effective and there is even a little bit safer way to create the the failed breakouts and that's to wait for lower highs and higher lows which i'm going to show you in a minute so how am i how am i going to navigate this trading range well in trading ranges i definitely have to draw my shortage on trend lines because there is a rule in price action trading the after break of a trend line there's going to be a retest of a new extreme so as we are right now working up higher we have a
break and a new high so from this point on after breaking a new high there's a time for at least correction or possibly full blown reversal and i'm going to do the same thing from the highs to the lows i'm just going to copy the capital line put it to the bottom you can see it fits nicely we have overshoot right here which leads to a break ninety percent of time we have a break two legs to a new low and i'm gonna do the same thing once again i'm gonna do the same thing once
again i'm just gonna copy it put it to the other side we have a break and a gigantic move to a new high so this is how i will as a price session trader look for entries and look for places where i know it's safe enough for a reversal i'm not going to bind the lows blindly if we don't have a break and a new high all of these cases we have a break and a new high and what i'm going to be using a lot other than selling and buying the breakouts in the opposite
direction to fading them i'm going to be waiting for a reversal pattern which is a very powerful setup and the reversal patterns are characterized with two felt attempts in the previous trend direction so if you can see if we are working up higher like this we have a break and a new high this up trend is over and i can be now looking for a reverser we have a first entry long pullback second entry long that failed this is a two failed attempts by the bulls to keep market rolling up higher and you can see
how nicely it felt obviously this is still way too early in the morning so i'm not going to mark these trades and we're continuing working on we have overshoot right here this is the new law right here pull back first entry pull back second entry short and you know how second entry shorts are very high probabilities set up because we are waiting for a break and a new low this is a second entry short and a nice bearish reversal bar so it would be natural for us to start looking for shorts and notice how we
have a one leg to new low little pullback and a second leg to a new lower and we have a little breakout you can see a double bottom right here holding prices nicely and we broke the support and we came back into the range and this is exactly what we should be looking for this is a failed break lower very high probability trade so this is the safest setup so far of the day and i know it looks fairly counter intuitive if you look if you look at the right side of the chart this is
what you would see and you would see a big bearish selloff working down lower so it is fairly hard to pull the trigger right here but this is exactly how you have to trade it and this is why you have to trust our price action rules but in case you are way too scared to go long here which can happen and it's happening a lot especially to a lot of beginner traders who are still trying trying to learn about the markets you can find a safer way you can find a reversal pattern and the same
thing we tried right here we're gonna try right here we're working lower we have a break two legs to a new low now we can look for correction or possibly reversal we're working up higher this is the first entry short it failed because this is not higher probability setup second entry short that failed once again here unfortunately we don't have a good bar so i'm just going to mark it only for you know as an example purpose if we had a much better bar because this bar is way too berry so we cannot go along
about this and this bar is way too big so we definitely cannot go along above this but this is a reverse pattern two felt attempts in the previous trends direction and ema is holding prices this is a reversal pattern so this is the safer way how to trade the trading ranges and we're going to have the same thing working down lower so we can see we have a break a massive lag to a new high here you can make a case for selling this breakout and i will mark this because this is the same thing
that happened right here we have a break and a new high and notice how far away you are away from ema this entire time you're so far away from ema prices will not stay way long away from ema the ema will pull prices to it and we broke the resistance we didn't broke below this bar we actually had to wait and break below this bearish bar and the bars were fairly big today so your money management had to be on point today and notice right here we have a break a new high we have failed
break higher so we're expecting for prices to go back into trading ranges and we have a new high right here pull back first century long that failed pull back second entry long that failed gigantic bearish bar and this is once again a reversal pattern just like we were looking right here and this is how you can see why it is so consistent and why these trading ranges are not so hard to trade just like the reversal pattern happened right here the reverser pattern is happening right here first century long pull back second entry long that
failed high probability setup we are coming off the resistance we are touching the resistance in this case this is unenterable because this is way too big of a bar so i just once again i have to mark it for trading purposes because this is just a ruler this is so big this is not even this is seven and a quarter point so this is no way we cannot enter this but this is just for you guys to see how reversal pattern looks in trading ranges and we have a break and a new low and i
actually even like taking this second entry because you know just because we have a break and you look this early you know we're coming off the tops in a trading ranges and you're most likely heading to the lower side just like here just like here you're heading to the high side from high side to low side from low side to high side so the overall bigger picture is now taking precedence so you can pay more attention to the bigger picture and not to the smaller pictures and we have a second entry short that's coming off
the top once again nice bearish bar reversal bar and you can see second entry short high probability set up coming off the tops you can see how we cannot close higher we just try and try to close higher but we cannot because we are in the trading ranges and same people who went short here and here and here they are still coming to go short in here obviously the trading range will fail eventually at some point or another and we make a sell off to a low side and right here this is where you would
be suspicious after you see this bounce working up higher this is where your alarm should go off a little bit because if this is a normal trading range and this is a normal selloff we should make it at least to here or even lower even break lower this support just like it happened every single time on the left side of the chart we should have made it to this low side but we didn't there's a gap in between this so there's a lot of balls that jump into the market way too early and not that
many sellers were still left into market so this is the first observation that you need to pay attention why we didn't make it to the low side the same thing happened right here same reversal pattern happened right here we have a new low right here first century short pull back second entry short you have this first break of this trend line right here so waiting for a new high felt second entry short ema is holding prices this is looking like a reversal pattern of course this is in the middle of the trading range so this
one would be fairly fairly aggressive but the reversal pattern felt second entry short is such a strong pattern that you could make a case for taking a trade even in the middle of trading but the safest way is to skip the middle and just wait for these bounces off the highs and off the lows and here we would have a here we would have a trade that would have failed on you obviously you cannot take this trade but let me mark this you are now working lower you have a new low right here first century
short pull back second entry short so you would be expecting for prices to go lower right here but you know just like a few minutes ago you notice right here that we didn't touch the support so this is the way how you could have avoided this but nevertheless this is a second entry short and this downtrend is now working you know it is in play so the second entry short is a potential setup the only reason why it's not enterable is because once again if you this is six and a quarter big bar because you
have to put your stop above this polish bar so this is unentrable as well because i'm scalping and i teach you guys to sculpt for you know in this market for 10 ticks which is two and a half points and even two and a half points which seems like a big target for a lot of you it is still nothing compared to almost six and a half bar so you know today's market is very volatile nevertheless this would be a loser if you took it probably depends also it depends how the bar work would look
on your chart because the charts can vary a lot but we didn't make it lower right here and we definitely didn't make it low right here so there is definitely some bullish bias happening because we normally should have been trading back to the support and we are not doing this so there's obviously a lot more people that are willing to buy and the sellers are not that prevalent so you need to kind of shift your gears here and you're working up higher and this is the trade that i actually took right here today i took
this failed break higher as well now this was a not ideal bar and once we made another push small little double bottom this is where i re-entered and the market quick easy scalp it ended higher and right now we are starting to chop and you can see we are starting to go into small little trading range which is not uncommon because this strain range is fairly big and the volatility picked up a lot so we went into this smaller trading range and you have to trade it the same way as you would trade the bigger
trading range you basically have to fade the breakouts and buy the lows and sell the highs but there also was pattern that i was looking at today because the way we did in the way we didn't come lower right here there was a bearish imbalance happening in the market and i made i think two videos about this so this is what the trend line what i was looking at this is what i found so i was more up to looking for longs even though you you need to play this trading range just like you would
play any other so you need to short this failed break higher you have a double top right here even triple top with this top fell break higher nice big bearish bar you need to jump back into the trading range and i actually didn't have this trend line before this wing so i found the trend line once we found this swing this is where i drew the trend line here and this was the reason why i like taking this trade because the support is holding at this point on and i'm waiting for a new high of
this trend line because after a break there's most likely going to be a new high so we are working up higher we have this two-tier channel working up higher and we have a break and a two legs to a new high so this is why i liked taking this long and once again off the lows just trade a smaller trading range just like you would trade any other trading range off the lows buy the lows and sell the highs and there would be second entry short you have a trend line working up higher you have
a break and a new high so now you're expecting reversal you broke this trading range and on overall bigger picture you are way way higher than you should have been you know overall you should be really looking for a lot of reasons to sell you can make a case for selling all of these because you broke the bigger pattern and this is what you should be paying more attention so just to remember that these shortened trend lines are key if you're afraid selling fading the breakouts just wait for reversal patterns wait for lower highs or
higher lows this is much safer and you can see how reliant it is and how actually effective that setup is and prices went back into trading range and you can see a lot of volatility it is only 1637 and we have so much bars in the chart and i'm this is why i'm doing this today early i have to get away from here um earlier so hopefully you will excuse me not marking all the trades throughout the day but once you see and now that the prices are going back into trading range you can see
the volatility is so big that we have a full flown downtrend inside of this trading range so but that that means that you have to still follow the rules and you have to wait for second entries at key entry points so you have to find the trend line you can find a trendline from the lows put it here to the top we have a second entry short right here which is according to our rules but it is not at the key entry point and it is way too big so you have to skip this you
have a second entry short with the set up the trend line but you don't have a break and at least attempt to make a new high of this option working up higher so you have to skip this one as well and you finally have a first entry short pull back second entry short it is at the key entry point we have attempt to make a new high break and attempt to make a new high so this is fine with us because a lot of times you will not get a new high if you are inside
of key entry point so this is off the trend line and second entry short high probability set up in and downtrend now you you eventually have a break and a new high and you can see we have a first century long pullback second entry loan but we're not looking for second entry longs because we're in a downtrend on the other hand we are looking for failures for failed second entry shorts with if we are in a downtrend fell second entry longs excuse me we are in a downtrend so first century long pullback second entry long
this is a felt second entry long we are in downtrend and we have a first break of this two-tier channel working lower so we are looking for a new low but at this point this is starting to look like a strong strong downtrend and you have a key level forming right here and you have a first century short pullback second entry short with a break any new high small little bar worth taking second entry short once again according to our rules you already have a break in a new low but this is such a strong
sell-off this is so many points to this point 47 points so you can see the volatility picked up a lot so this is trying to like a strong downtrend so remember once you get out of the trading range you still have to wait for high probability setup at the key entry points and second entries at the key entry points you still have to draw short term trend lines and wait for breaks and new highs and you can be looking for failed second entry longs if you are in a downtrend so hopefully you guys enjoyed the
video if you made it to this very end of the video hit that like button i would appreciate it and if you're more interested about learning price action you can subscribe to the channel and i'm gonna see you guys in the next one bye guys
