Beginner's Guide For Traders About Consolidating Markets and Golden Zones ?


Consolidating Markets, What Are They?

It is a market condition when the price is ranging in between two prices like the image above. 

When the market is Consolidating it is not an optimal time to trade.  You should avoid trading in ranges like above.  The only time trades should be entered is when the price is rejecting the resistance or support zones of the range.

The reasons we do not tend to trade in consolidating markets is because the saying “The Trend is Your Friend” is true. 

There are not as many opportunities in consolidating markets, and when it doubt .. just sit it out!

The Golden Zone …. What Is It?

The Golden Zone is a zone in-between the 0.382 and the 0.618 fibonacci retracement zones.

We call it the golden zone because it is a zone that the price often reverses out of a retracement at and continues in its overall trend. 

In the picture example above, the price came down to the golden zone, 0.618 retracement zone to be exact but all entries inside this golden zone would have been good, valid and profitable entries.

Work on spotting that golden zone and looking for confirmations of an entry!

DO NOT just enter because the price has come into the zone, look for other signs such as candlestick patterns, increased momentum etc.

Do you look for the golden zone when trading? 

#Trading #education

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