One of the primary challenges traders deal with is knowing when the markets are volatile enough to enter intraday and swing trades vs. when to avoid trading. Obvious breakouts often occur too late in the trading day to generate useful buy and sell signals; what traders need are early indications of the likely intraday trend and a way to identify the most favorable conditions for follow-through. Fortunately, pre-market trading activity and breakouts of the previous day’s high or low that occur in the broader market can give an early indication of when, and in which direction, to trade during a trading session. The best trading opportunities occur on days the market is moving outside the prior day’s range and in the direction of the pre-market trend. Read on to learn more.
ADX breakouts can signal momentum setups as well as exit conditions for intraday and swing traders.
When price moves substantially above or below its moving average, there’s a good chance (all things being equal) the price will return at least in part toward its average price. The idea of range trading is to capitalize on this tendency of prices to revert to the mean.
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