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 clings to small gains near 1.1750
Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key US data releases and the ECB policy announcements.
GBP/USD edges higher toward 1.3400 as traders await key data and BoE
GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.
Japanese Yen adds to strong gains and drags USD/JPY to 155.00 amid hawkish BoJ bets
The Japanese Yen extends its steady intraday ascent through the Asian session on Monday, dragging the USD/JPY pair to the 155.00 psychological mark in the last hour. Against the backdrop of the recent shift in rhetoric from Bank of Japan Governor Kazuo Ueda, an improvement in business confidence reaffirms market bets for an imminent rate hike this week.
Editors’ Picks
EUR/USD clings to small gains near 1.1750
Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key US data releases and the ECB policy announcements.
GBP/USD edges higher toward 1.3400 as traders await key data and BoE
GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.
Gold builds on previous week's gains, approaches $4,350
Gold preserves its bullish momentum after rising more than 2% last week and climbs toward $4,350 on Monday. The precious metal extends its upside as the US Dollar remains on the back foot on growing expectations for a dovish Fed policy outlook next year.
Solana consolidates as spot ETF inflows near $1 billion signal institutional dip-buying
Solana price hovers above $131 at the time of writing on Monday, nearing the upper boundary of a falling wedge pattern, awaiting a decisive breakout. On the institutional side, demand for spot Solana Exchange-Traded Funds remained firm, pushing total assets under management to nearly $1 billion since launch.
Big week ends with big doubts
The S&P 500 continued to push higher yesterday as the US 2-year yield wavered around the 3.50% mark following a Federal Reserve (Fed) rate cut earlier this week that was ultimately perceived as not that hawkish after all. The cut is especially boosting the non-tech pockets of the market.
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