Ranging occurs when the market price stays at around the same level with very little change.
In the situation, the support and resistance level* are very close to one another.
A Breakout occurs when a ranging markets suddenly erupts into a dramatic rise or fall*.
Which breaks through the previous support and resistance level.
Entering into a trade at the breakout point would usually results in high Returns.
Rise and Fall
The market is forever moving in waves.
What goes up must come down and what goes down will eventually rise back back.
Rises or falls are never absolute as there’s always a correction, meaning that at the height of the trend the trend corrects itself and tries to return to its previous value, and then the price continues in the direction of the trend.
The correction create a kind of waves within a wave, as you can see in the diagram.
We marked the reversal points in the waves with letters ABCD.
These markings will serve as the basis for the various market analysis they will be performed.
It is therefore very important to learn how to recognize them.