Chapter 22

Trending Trading Range Days

Primary characteristics of trending trading range days:

  • The opening range is about a third to half the size of the range of recent days.
  • There is a breakout after an hour or two and then the market forms another trading range.
  • Because there are trading ranges, there are usually opportunities to take trades in both directions.
  • There sometimes are multiple breakouts and trading ranges, but when this happens, it is usually better to consider the day as a stronger type of trend day and trade only with trend.
  • After the second trading range begins to form, there is usually a pullback that tests the earlier trading range.
  • The test often breaks back into the earlier range. When it comes close to but does not penetrate the prior range, the trend is a little stronger.
  • Sometimes the market goes all the way through the earlier range and the day becomes a reversal day.
  • Most reversal days begin as trending trading range days.
  • When the breakout is very strong, the day is more likely to become a weak spike and channel trend.

Since every trend has pullbacks and they are small trading ranges, some form of a trending trading range day is present during every trend day, and the trending trading ranges are the dominant features at least a couple of times each week. If the opening range is about a third to half of the size of the recent average daily range, then look for a breakout and an approximate doubling of the range of the day. These trend days are made ...

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