CASE STUDY: How To Swing Trade Range-bound Markets Using Relative Strength

Range-bound Markets and Relative Strength

The road to trading hell is paved with range-bound markets.

That’s not hyperbole, it’s a fact. Most traders I come across fear the downtrending market, but it’s actually markets that are stuck within a right range that are the most difficult to trade. In a down trend, wild price swings lead to volatility that adept traders can convert into dollars. On the other hand, volatility is sucked out of range-bound markets. Price action goes nowhere and most traders get chopped out of seemingly good setups.

Does that mean you completely stop trading until a trend develops?

Well, there’s nothing wrong with that. Sitting on your hands is an option. However, I have a solution that leads to profits in even the worst range-bound markets. The first thing I do is pore over chart after chart looking for stocks that were momentum leaders going into the range. Next, I look for stocks showing relative strength in comparison to $SPY. Finally, I wait patiently for a strong entry signal.

It’s as simple as these three steps.

I recently did exactly that with winning trend pullback trade $SOXL. Let’s lay out the 3 step process in this trend pullback setup case study:

  1. Semiconductor sector was in a strong uptrend before SPY went into range-bound price action
  2. During the range, it showed relative strength compared to the market
  3. I entered triple leveraged semiconductor ETF $SOXL when it put in a strong hammer candle entry signal at support.

Notice our analysis is not just stock specific and setup based. Just as important is our analysis of the market, which was range-bound, and sector, which showed relative strength. Armed with this information we are able to beat the market and make the type of profits we expect in a momentum trading environment.

Watch the $SOXL case study video as I go into great detail all of the elements that made this a successful trade.

Remember, members of the swing service get all of these trade alerts intraday in real time.

This swing trading service is great for those that work and can’t monitor the computer all day. We have in-depth nightly reports on the game plan for the day/week, and all stock picks that I trade will be alerted and emailed to you.

Check out the Swing Service HERE

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