[Stock, FX] Trend after range


The exchange rate in March 2022 was a very fluctuating market. In particular, the yen’s exchange rate surged and became very rough. Perhaps because of such a turbulent March, the full range market has continued for two days in April. As expected, the market is tired and it seems like we are taking a rest. In such a market, it is wise to wait leisurely until the next trend occurs. After the range, strong trends tend to occur as a whole.


The range market is accumulating power

A range market is a lull that occurs after a large market movement. This period is the charging period before the next big trend. Of course, the longer the range continues, the more intense and big the next trend will be. All a trader can do is wait. Let’s relax until the next direction is given.

When direction comes out

When you break the range and get direction, a big rise or a big descent occurs. This is the signal that ends the range and gives direction. It is safe to aim for a temporary return after this big move in the entry timing. This is because whenever there is a big rise or fall, there is a movement to return once. The trend after the range will almost always move a lot. Don’t just resist. There is a high possibility of a big loss. If you go against the flow, you will always be in a difficult situation.

Trend example after range 1

The chart below is the AUD / JPY 1-hour chart for April 2022. The range, which lasted for nearly a day surrounded by a blue frame, was broken and fell sharply. Eventually it fell by 150 pips. After this big crash, the range is happening again. You need to build up a lot of power to create a trend. Therefore, trends do not always occur.

Trend example 2 after range

The chart below is the GBP / JPY 1-hour chart for April 2022. The range that lasted for nearly a day, surrounded by a blue frame, was broken and rose significantly. It has risen by nearly 1 yen, but the big range has continued for more than a day before the trend occurred.

Trend follow cannot win in the range

The majority of professional traders are said to be trend followers. It is said that this is because the trend follow strategy has a small physical and mental burden and can win big. The trend-following strategy can never win 100% in the range market. The entry timing is after the signal that the trend appears. Waiting is also an important action.

The March 2022 surge is an exception

A surge market like the yen exchange rate in March 2022 is a rare phenomenon. It doesn’t happen that much. Therefore, it is generally the market price that repeats the range and the trend. Let’s calmly grasp the state of the market and change the strategy to compete. Trends are more likely to occur after the range, while the range has the power to create the trend.