#4 Range-bound trading (ATR & Standard Deviation)
Submitted by User on February 21, 2010 - 20:13.
Submitted by Manus168
I just want to share how to detect Range or Trending Market, but unfortunately this
technique I just try & apply only in EUR/USD at H1 TimeFrame; please feel free to tweak.
Here's The Deal:
At EUR/USD Timeframe H1;
try to put this 2 Indicators: ATR(14) & Standard Deviation(14)
Now here's the rules ...
If you find ATR(14) > then the Standard Deviation(14) it means EUR/USD = Ranging/Sideways.
If you find ATR(14) < then the Standard Deviation(14) it means EUR/USD = Trending.
The Logic behinds is; if the SD is smaller then the ATR it means Market in range of the 14 bars because ATR is measure the range (high to low) of the N bars (in this case 14 bars); BUT if SD is more large then the ATR it means Market break the boundaries of High to Low 14 Bars Range
& the result Market is Trending.
Please feel free for comment Bro Edward.
Happy Trading ;)