Trendspotting (PART 2)
Is it time to bust out those Fibs and look for retracements?
Or are ranges holding?
Just as the coach comes up with different plays for
particular situations or opponents, you should also be able to decide which
strategy to use depending on market environment.
By knowing what market environment we are trading in, we can
choose a trend-based strategy in a trending market or a range-bound strategy in
a ranging market.
Are you worried about not getting to use your beastly
range-bound strategy? How about your Bring-Home-
Da-Bacon trend-based system?
Have no fear!
The forex market provides many trending and ranging
opportunities across different time frames wherein these strategies can be
implemented.
By knowing which strategies are appropriate, you will find
it easier to figure out which indicators to pull out from your toolbox.
For instance, Fibs and trend lines are useful in trending
markets while pivot points, support and resistance levels are helpful when the
market is ranging.
Before spotting those opportunities, you have to be able to
determine the market environment. The state of the market can be classified
into three scenarios:
-Trending up
-Trending down
-Ranging
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