Sideways trend structure is more common than many new traders imagine.

So it’s important to learn how to recognise a sideways market. (For my Sideways Trend Definition, see Page 101 (and Fig 3.44) of Chapter 3 of the YTC Price Action Trader.)

And it’s important to find the way that YOU best trade this market. Some traders thrive in sideways conditions, preferring them to a more directional environment. Others, like me, take them as a signal to step back a little, slow down and only take the best of the best trade opportunities.

Typically I approach it in this way…

<image: A sideways market structure>

<image: A sideways market structure>

<image: A sideways market structure>

But I do remain somewhat focussed on price. Not intensely. Just a relaxed, casual observation.

Because there are times when I may be able to see edge within the structure. And when I might be tempted to exploit that edge.

The prior article on this topic demonstrated one such example, where the sideways range was particularly wide and a stable directional trend developed within that larger structure.

But more often than not it’s when something like this occurs…

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

Just like occurred here… in a rather messy example on a day with particularly unfavourable conditions. But hey, that’s the nature of this game. It’s not always smooth price flow and easy movement to the target.

Note that the market doesn’t start off with a sideways trend. That trend structure forms a little later. First, there is some opportunity to play off the prior day’s low (PDL) support.

<image: Structure within Structure>

<image: Structure within Structure>

At this point I stepped back. The P&L was in the green, but it’s clear that (a) the level was not providing clear directional follow through, with buyers and sellers battling for dominance and causing chop, and (b) I was not reading this well.

Do NOT be afraid to step back and say, “I can’t read this. I don’t know which side is in control here. I don’t see the structure that is building (ahead of price). And basically, I have no idea what is going on.

It happens more than we like to admit.

Step back. And wait.

Clarity will return as more price action unfolds at the right of the screen.

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

<image: Structure within Structure>

Note the choppy overlap of the candles, with endless wicks (tails) above and below. These are conditions I particularly dislike. If I can profit on a day like this, I consider myself lucky.

It’s time to stand aside now.

Don’t push your luck in unfavourable conditions. You’ll rarely win.

As it says in the last image, take your profits and move on. Next time, it might be different.

Happy trading,

Lance Beggs

 


 

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *