Dr. Brett Steenbarger on identifying ranging and trading environment

• Posted by Ivanhoff
• on April 20th, 2009

• Identifying early in the day whether we are in ranging or trending environment defines trading tactics going forward;
• If we are in a range-bound environment, we’ll identify a midpoint value of the range and fade moves that extend from it;
• If we are in a trending environment, we buy on the breakout and add at every low volume pullback until it works.
• NYSE Advance/Decline line value during the first half an hour of the day is usually a good indicator for ranging or directional environment for the rest of the day.

High-volume break-outs from prolonged in the time range is usually a start of a new powerful trend. The larger the volume and the longer the consolidation level prior to the break-out, the better the odds that the newly established trend will continue.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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