Trends and Ranges
Traders use trends and ranges extensively in the financial markets, and Forex traders are no exception. Markets are normally either trending or ranging.
A ranging market happens when the price is moving up and down within a horizontal channel, but over time is predominantly moving sideways. A market is trending when the price moves in an upwards or downwards channel. See Figure 3.
Trends and ranges, combined with support and resistance are the basis of most trading techniques. Range traders, trend traders, and breakout traders all use a combination of these indicators to time their entry and exit points.
To identify trends, traders use visual inspection, as well as automatic indicators such as the Average Directional Index (ADX).