Sideways trend in Forex

Sideways trend in Forex

Sideways trend in Forex

Absolutely every trader must know what a sideways trend is in Forex, be able to determine it on the chart, and have at least one proven strategy for a sideways trend. A sideways trend can be called a market situation when the price of the asset in question moves up and down in a certain price range.

In other words, a sideways trend in technical analysis is a neutral trend. This is explained by the fact that bulls and bears do not have a sufficient amount of force to push the price higher or lower.

Schematically, the sideways trend looks like this:

sideways trend

Figure 1. Sideways trend schematically.

Often such fluctuations do not exceed 3 points. This is when the price moves in a horizontal direction. That is, the market does not show a pronounced upward or downward trend.

Many Forex traders call a sideways trend a flat. There is no trading at such times. That is why many market participants prefer to wait for a specific market movement. On the Forex chart, the “sideways " looks like this:

sideways trend in the Forex market

Figure 2. Example of a sideways trend on the chart.

But do not think that during the sideways movement in the market absolutely no one is trading. There are some craftsmen who skillfully apply scalping strategies. Even with small fluctuations, they manage to earn money. Since the sideways trend in Forex occurs in all currencies, it is a sin not to use this trading situation for your own benefit.

Scalping during a sideways trend (flat) is actually easy. The whole point of trading analysis is to wait for the price to reach a local high or low, and then open an order in the opposite direction from this level (for a rebound). But before opening trading orders in any of the sides, it is recommended to connect the highs and lows with horizontal lines in order to see the boundaries of price fluctuations.

For example, the price can fluctuate up or down by no more than 15 points. A scalper trader during a flat should wait until the price reaches a certain limit (upper or lower), then open an order in the opposite direction. With this scalping, you won't be able to take many points. Optimal – up to 5 points. To understand what we are talking about, we suggest you look at the chart below:

strategies for a sideways trend

Figure 3. scalping in a sideways trend.

To optimize the losses, it would be better if the scalper will choose the pair with the minimum spread value. It is important to note that trading will be more efficient if you use pending orders. They should be placed 15-20 points above the horizontal borders that are drawn at the highs and lows. After all, sooner or later the sidewall will be beaten in one of the sides with a subsequent strong movement.
How to trade on the Forex market when the price moves sideways?

If you want to eliminate the maximum possible risks when you see a sideways trend, then you should not scalp on a sideways price movement. This is tedious and may not meet expectations. In such cases, it is more profitable to set pending orders.

Also, don't forget about stop loss orders. If you do not limit your losses, you can lose a decent amount of your Deposit. An experienced trader always takes into account the rule that any sideways movement will sooner or later be replaced by a strong upward or downward movement. If you don't know how to determine a sideways trend, find a good Forex indicator.

An equally important aspect of the strategy for a sideways trend is finding the exit point from the side corridor or its breakout. The flat oscillator predicts such points quite well.
Indicators for trading on a sideways trend

It is not always possible to determine the entry and exit points during a sideways trend. Therefore, we recommend that you read some of these useful indicators.

A good indicator that shows a flat market is the Pulse Flat indicator. If the histogram line is yellow, it means that the market is trending, but when the line is green, then it is flat.

The iVAR indicator skillfully detects a flat. Its zigzag line shows movements around the 0.5 mark. If the lines are higher than this value, then there is a flat, and a trend is lower.

The Stochastic indicator for a flat can find it well sideways. It consists of two lines running in a certain range. The absence of a trend (sideways) will show the moving averages. If they diverge, there is a trend in the market, but when they come together, it means an uncertain trend (sideways trend).

A good indicator is the bill Williams alligator, which consists of three moving averages with different deviation periods. The indicator of a flat fluctuation is the Bollinger Bands. When the channel borders converge, the market is flat, the divergence of the channel in any of the sides shows the trend line.

Some traders claim that when the price moves sideways, you will not be able to earn much. It should be noted that there is some truth in this. But when the price has specific limits of movement, you can earn money. Always use additional analysis when trading in a sideways movement. For example, enter only in the direction of the global trend, and not against it. Do not trade after the end of the us trading session. Follow the main laws of money management and you will be happy.

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