Wednesday, May 25, 2016

How to Figure Out Range Bound Markets Before it Happens


 

Larning

It is always difficult for a Trader  rather important and useful for any Trader to Know about Probable RangeBound Market Comes. Twitter is always a learning source for me and many others who use it that way.

Recently in a series of Tweets by @KickAssTrader (popularly known for his MP , VSA and OF charts ) shared how to figure out RangeBound Market Before it happens. I thought this Infomation will go in a flow so wanted to preserve it for my use and also for public interest Posting it here. All Credit to @KickAssTrader for sharing this information with us.

How to Figure Out Range Bound Markets Before it Happens

  • Rangebound is basically assumed as a day where we can trade with a +ve expectancy against the ongoing trend.

  • To have a opposing force strong enuf to do that wud imply you can only assume such a period will come into existence when u hit an area on a higher TF that can provide a counter force.

  • Also when a move is into exhaustion the range extensions get smaller each time and each counter move pushes further back into the old balance.

  • E.g 4/28-5/3 (2016) smaller range extensions lead to bigger pushes into old balance.

  • Smaller range extension result from higher TF support underneath ,Same for 5/4-5/9 & today (17thMay)!

  • Minus any opposing force tht can push hard mean reversion is a recipe for disaster.

  • The trend continues to push down while the opposing force is decent enuf to cutoff momentum to provide a move till atleast 50-80% of range

  • Same can be accomplished with delta as poitned out by @zzzune  imbalance can only go so far until it snaps or reaches escape velocity(trend)

  • You shud be able to figure out a range beofrehand from where demand /supply would be cutoff n change frm holding to flipping.

 

  • Below Chart Shows How Range Extension –Reduction – lead to Mean Reversion. (Chart is By @KickAssTrader)

 

Range Extens


For Further Reading,
How To, Learning, Range Bound

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