How To Solve Sideways Trends | Forex Factory

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How To Solve Sideways Trends

  • #1
  • First Post: Apr 19, 2010 11:15pm Apr 19, 2010 11:15pm
Hey there everyone,

I have a slight dilemma, my biggest enemy at the moment is a sideways trend. I know it is possible to predict when the trend is going to break (up or down), but I cannot seem to find an accurate technique.

Can someone please explain to me what lines to draw to predict when a sideways trend will break?

Thanks!
  • #2
  • Apr 20, 2010 1:08am Apr 20, 2010 1:08am
Quoting Saidar
Hey there everyone,

I have a slight dilemma, my biggest enemy at the moment is a sideways trend. I know it is possible to predict when the trend is going to break (up or down), but I cannot seem to find an accurate technique.

Can someone please explain to me what lines to draw to predict when a sideways trend will break?

Thanks!
A sideways trend? Do you mean a range or consolidation?
  • #3
  • Apr 20, 2010 1:20am Apr 20, 2010 1:20am
Quoting pipmutt
A sideways trend? Do you mean a range or consolidation?
Look at the pic below:

http://www.online-forex-trading.co.za/sideways.jpg

The two circled areas are sideways trends. The last one has a major break, it goes straight down at the most right red arrow.

How can I predict when the trend is going to go up or down?

My strategy is the arrows, when the arrow is red I sell, when the arrow is red I buy, but as you can see it does not work in a sideways trend.

I need to identify when the sideways trend is going to change into an up or down trend.

Hope this answers your question!

P.S what is range and consolidation?
  • #4
  • Apr 20, 2010 1:21am Apr 20, 2010 1:21am
First identify the range. I usually draw a box round it. Leave the wicks outside the box. Identify the overall trend. Wait for the price to break out and close without a wick. That tells us it wants to be there! Trade off the top of the break out bar.

Attached Image (click to enlarge)
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Click on the chart a couple of times. Ask away.
Gone to a better place
  • #5
  • Apr 20, 2010 1:29am Apr 20, 2010 1:29am
For example look at the follow chart:

http://www.online-forex-trading.co.za/sideways2.jpg

Sooner or later the market is going to go up or go down. A kind of sideways trend (or whatever you call it) has formed, and it is either going to go up or down.

Which one of the two will happen and when? How can I predict this?
  • #6
  • Apr 20, 2010 1:32am Apr 20, 2010 1:32am
Quoting smikester
First identify the range. I usually draw a box round it. Leave the wicks outside the box. Identify the overall trend. Wait for the price to break out and close without a wick. That tells us it wants to be there! Trade off the top of the break out bar.

Attachment

Click on the chart a couple of times. Ask away.
Interesting thanks!

I'm a bit confused why should click the chart a couple of times?
  • #7
  • Apr 20, 2010 1:41am Apr 20, 2010 1:41am
Quoting Saidar
I know it is possible to predict when the trend is going to break (up or down)
I'd like to know how you came to that conclusion.
Nobody can predict anything, anyone who tells you any different is either lying, stupid or delusional (or a linear combination of all three).
All you can do is define probabilities based on history, even that is full of easy to step into pitfalls.
The breaking of a wave cannot explain the whole sea.
  • #8
  • Apr 20, 2010 2:04am Apr 20, 2010 2:04am
Quoting Craig
I'd like to know how you came to that conclusion.
Nobody can predict anything, anyone who tells you any different is either lying, stupid or delusional (or a linear combination of all three).
All you can do is define probabilities based on history, even that is full of easy to step into pitfalls.
Ok maybe I stated my question wrong, what I meant is to more or less know what is going to happen, or some sort of indication when the sideways trend is broken.

Some guy actually told me he knows when it is going to happen, won't say his name though hehe
  • #9
  • Apr 20, 2010 2:11am Apr 20, 2010 2:11am
Maybe a different line to think on: new guys always want to know things like 'when will the breakout happen' etc. Most markets spend most of their time ranging, maybe a more productive avenue would be 'how do I exploit ranging?'. So instead of getting faked out 5 times before your big breakout arrives, you may have 5 winners, followed by a loser when (or if) the breakout arrives. In the longer term, you will see overall cycles of trend and range on longer time-frames, when the market tends to trend you will see all the PA threads spring into life as everybody extols the virtues of pin bars, trend lines and other such crap, but really all they are doing is jumping on the trend and holding, that's not trading, it's investing, the actual entries are no better than random. As soon as the market starts to range, everybody is suddenly quiet, and it ranges a lot more than it trends. Anyway, I'm rambling, I hope some of this helps in some way.
The breaking of a wave cannot explain the whole sea.
  • #10
  • Apr 20, 2010 2:57am Apr 20, 2010 2:57am
Quoting Craig
Maybe a different line to think on: new guys always want to know things like 'when will the breakout happen' etc. Most markets spend most of their time ranging, maybe a more productive avenue would be 'how do I exploit ranging?'. So instead of getting faked out 5 times before your big breakout arrives, you may have 5 winners, followed by a loser when (or if) the breakout arrives. In the longer term, you will see overall cycles of trend and range on longer time-frames, when the market tends to trend you will see all the PA threads spring into life...
Makes sense! I think taking advantage or ranging will be more effective on higher time frames. What technique do you propose using with ranging?
  • #11
  • Apr 20, 2010 3:57am Apr 20, 2010 3:57am
Quoting Saidar
Makes sense! I think taking advantage or ranging will be more effective on higher time frames. What technique do you propose using with ranging?
There are many ways, Google the term 'Reversion To Mean'.
The breaking of a wave cannot explain the whole sea.
  • #12
  • Last Post: Edited 6:08am Apr 20, 2010 4:56am | Edited 6:08am
Quoting Saidar
Makes sense! I think taking advantage or ranging will be more effective on higher time frames. What technique do you propose using with ranging?
All you need is a rectangle and three horizontal lines, no indicators no BS.

Then wait for PA (Pin Bars, BEOB, BUOB, IB's etc) to develop at those lines and then you'll be in love with ranges.

and some experienced people can trade without any PA confirmation. I mean taking the trades at these level straight away when price hits them.

Then if you could get a Fib, a TL and a Big round number like 1.6, 1.65, 1.55 at the same spot your probability of winning gets more higher.
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