GBPCAD: A ranging situation and two possibilities
Question from Student
A student asked the below question with the below chart.
- Was it possible to have entered a buy at this green area based on a 13TL?
- After price came down, how should we have done our trade management?
A look at the Current Picture on H4
- For the past 6 weeks, price has been ranging (H4 boxes are flat)
- Mapping the highs and lows of these H4 boxes gives an approximate range in which price is currently travelling in.
- The only way to trade a range is to look for either of the below possibilities.
- WRMB of previous boxes highs/lows
- 1234 retracement to previous boxes highs/lows
- Buying near Support / Selling near Resistance (Very Risky)
To answer the question put forth then, it would not have been a good place to have entered a buy at the green box
- Price was in the middle of the range, far from the Support and Resistance zones of the range and thus could have gone either way.
- In terms of trade management, once price closes back below a 13TL, we could have reduced our position size or shifted SL to below F3 (Fib-R drawn from pt1 to pt4) to reduce our risk exposure.
So what now?
Currently, unless price breaks out of the range, it would continue to be trapped. Besides this situation, there are still two possibilities to consider.