Alex Spiroglou, CFTe, DipTA (ATAA)
Independent Analyst
Identifying ranging and trending markets
The challenge for traders and technicians is to define and distinguish between a ranging market and a trending market.
This section explores the difficulty of defining these market conditions in a rules-based quantitative way.
Defining ranging and trending markets
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Traders face the challenge of defining or identifying ranging and trending markets.
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The goal is to define these market conditions in a rules-based quantitative manner.
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Real-time identification of these market conditions is crucial.
Using corn futures chart as an example
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The highlighted yellow area on the chart represents a trading range in corn futures.
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Visually identifying this range is relatively easy with hindsight, but real-time identification is more challenging.
Utilizing the MACD-V indicator
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The MACD-V indicator can be used to identify ranging markets.
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One of the 7 Core Ranges within the MACD-V indicator is specifically designed for this purpose.
Rule for identifying ranging markets with MACD-V
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According to the rule, when the MACD-V indicator stays between -50 and 50 for more than 25 bars, it indicates a ranging market.
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The MACD-V indicator oscillates around zero when there is no significant upside or downside momentum in the market.
Real-time application of ranging market definition
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Point A represents where the MACD-V indicator crossed above -50, indicating an upward trend.
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Point B represents where the 25-bar rule was satisfied, confirming a ranging market condition.
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From point B onwards until the end of the highlighted area, we can consider it as a real-time definition of being in a trading range.
Importance of using tools like MACD-V
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The MACD-V indicator provides valuable insights into identifying ranging markets.
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It helps traders make informed decisions based on real-time data analysis.
Conclusion
The MACD-V indicator and its specific range rules can be used to define and identify ranging markets.
This section emphasizes the importance of using such tools for real-time market analysis.
Utilizing MACD-V for ranging market analysis
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The MACD-V indicator's range rules are effective in identifying ranging markets.
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Traders can use this information to make informed trading decisions.
Benefits of real-time definition
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Real-time identification of ranging markets allows traders to adapt their strategies accordingly.
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It provides a quantitative approach to understanding market conditions.
Final thoughts
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Understanding the difference between ranging and trending markets is crucial for traders and technicians.
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Utilizing tools like the MACD-V indicator helps in defining these market conditions accurately on a real-time basis.
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Editors’ Picks
EUR/USD off highs, back to around 1.1900
EUR/USD keeps its strong bid bias in place despite recedeing to the 1.1900 zone following earlier peaks north of 1.1900 the figure on Monday. The US Dollar remains under pressure, as traders stay on the sidelines ahead of Wednesday’s key January jobs report, leaving the pair room to extend its upward trend for now.
GBP/USD hits three-day peaks, targets 1.3700
GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.
USD/JPY bounces off lows, back above 156.00
USD/JPY is starting the week markedly on the defensive, sliding back toward the 155.50 area where it has met some decent contention for now. The move lower in spot follows FX intervention chatter after PM S. Takaichi scored a landslide win in Sunday’s election..
Editors’ Picks
EUR/USD off highs, back to around 1.1900
EUR/USD keeps its strong bid bias in place despite recedeing to the 1.1900 zone following earlier peaks north of 1.1900 the figure on Monday. The US Dollar remains under pressure, as traders stay on the sidelines ahead of Wednesday’s key January jobs report, leaving the pair room to extend its upward trend for now.
USD/JPY bounces off lows, back above 156.00
USD/JPY is starting the week markedly on the defensive, sliding back toward the 155.50 area where it has met some decent contention for now. The move lower in spot follows FX intervention chatter after PM S. Takaichi scored a landslide win in Sunday’s election..
Gold picks up pace, retargets $5,100
Gold gathers fresh steam, challenging daily highs en route to the $5,100 mark per troy ounce in the latter part of Monday’s session. The precious metal finds support from fresh signs of continued buying by the PBoC, while expectations that the Fed could lean more dovish also collaborate with the uptick.
Crypto Today: Bitcoin steadies around $70,000, Ethereum and XRP remain under pressure
Bitcoin hovers around $70,000, up near 15% from last week's low of $60,000 despite low retail demand. Ethereum delicately holds $2,000 support as weak technicals weigh amid declining futures Open Interest. XRP seeks support above $1.40 after facing rejection at $1.54 during the previous week's sharp rebound.
Japanese PM Takaichi nabs unprecedented victory – US data eyed this week
I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.
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