Market Cycles

Bull X Bear joined discussion · Oct 13, 2024 20:18

In a heavily trending market, counter-trend trading can be particularly risky. When prices are moving decisively in one direction, attempts to trade against that trend may lead to losses, especially if you’re caught in a “fake-out.” A fake-out occurs when the price briefly moves against the trend, prompting traders to enter counter-trend positions, only for the market to reverse sharply and continue in the original direction.

In a ranging or sideways market, both long and short positions can be effective strategies. In these conditions, neither bulls nor bears have clear dominance, leading to price fluctuations within a defined range. Traders can capitalize on this by buying at support levels and selling at resistance levels.

Since the market lacks a strong directional trend, it creates opportunities for short-term trades. By identifying key price levels, traders can effectively exploit the oscillations, taking advantage of the predictable price movements.

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