Trading ranges, breakouts and pullbacks in price action

In the previous chapter of our guide, we introduced you to the basic terms, concepts and advantages of price action trading, particularly in trending markets. The following chapter aims to provide you with useful insight into what to expect when the market is in a state of equilibrium and therefore confined to a trading range. Because trading a two-sided market differs from trading strong trends, we will highlight the main features of this environment and explain what traders, especially beginners, should avoid.

Moreover, you will become more familiar with the concepts of breakouts and pullbacks, which we touched on in the first chapter. This time we will concentrate on these moves as shifts in momentum after a trading range, while also highlighting some of their characteristics in trend trading. Most importantly, we will explain why a trader, especially an inexperienced one, must not go against the market and what to watch for during trading ranges, including the worst of them all – the so-called ‘barbed wire’ pattern.

You are welcome to begin the second chapter of our guide with the article ‘Overview of Trading Ranges’. We look forward to helping you become a better trader!