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What is range entry in forex?

Range entry in forex refers to a trading strategy that involves identifying a range-bound market and entering trades at the boundaries of the range. Range-bound markets are characterized by a sideways movement of prices, where the currency pair is neither trending upwards nor downwards. Instead, it oscillates between a support level and a resistance level, creating a trading range.

Range entry is a popular forex trading strategy for traders who prefer to trade in a low-volatility market. It is a type of mean reversion strategy, which assumes that prices will eventually revert to their mean or average value. Therefore, traders who use range entry look for opportunities to buy at the bottom of the range and sell at the top of the range.

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The first step in range entry is to identify a range-bound market. This can be done by looking at the price charts and identifying areas where the price has been trading sideways for an extended period. The range is defined by two levels, the support level, and the resistance level. The support level is the lower boundary of the range, and it represents a price level at which the buyers are expected to step in and push the price upwards. The resistance level is the upper boundary of the range, and it represents a price level at which the sellers are expected to step in and push the price downwards.

Once the range has been identified, the trader can look for opportunities to enter trades at the boundaries of the range. To do this, the trader can use various technical indicators to confirm the range boundaries and to identify potential entry points. For example, the trader can use the Relative Strength Index (RSI) to identify overbought and oversold conditions. When the RSI reaches the upper boundary of the range, it signals a potential sell opportunity. Conversely, when the RSI reaches the lower boundary of the range, it signals a potential buy opportunity.

Another popular technical indicator used in range entry is the Bollinger Bands. Bollinger Bands consist of three lines, the upper band, the lower band, and the middle band. The middle band is a moving average, while the upper and lower bands represent two standard deviations from the moving average. When the price touches the upper band, it signals a potential sell opportunity, and when the price touches the lower band, it signals a potential buy opportunity.

Range entry is a low-risk trading strategy because the trader can set their stop-loss orders near the range boundaries. This ensures that the trader only risks a small amount of their capital in each trade. However, range entry requires patience and discipline because it can take some time for the price to reach the range boundaries. Therefore, traders who use range entry must be willing to wait for the right opportunities to present themselves.

In conclusion, range entry is a popular forex trading strategy that involves identifying a range-bound market and entering trades at the boundaries of the range. Range-bound markets are characterized by a sideways movement of prices, and traders who use range entry look for opportunities to buy at the bottom of the range and sell at the top of the range. Range entry is a low-risk trading strategy, but it requires patience and discipline. Therefore, traders who use range entry must be willing to wait for the right opportunities to present themselves.

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