How to Trade Sideways Price Action on GOLD. Profitable XAUUSD Day Trading Range Market Strategy

Turn boring ranging market into your biggest advantage.

The truth is that consolidation trading can be even more profitable than trend following trading Gold XAUUSD.

In this article, I will teach you a simple consolidation strategy to day-trade sideways price action.

What is Ranging Market

In order to trade a ranging market, first, you should learn to identify that correctly.

This simple rule will help you to identify that on Gold on any time frame. (for this strategy, we will look for a consolidation on a 4H time frame strictly)

Gold price should simply stop updating:

• lower lows and lower highs (if the trend was previous bearish),

• higher highs and higher lows (if the trend was previously bullish).

Examine a price action on Gold XAUUSD on a 4H time frame:

Trading in a bearish trend, we can easily identify 2 periods of consolidation.

The price temporarily started ranging, not managing to update:

• lower lows in the first instance,

• lower lows and lower highs in the second one.

Such a market behavior is a clear indication of a sideways price action.

Find a Range

After you confirmed a consolidation on Gold, you will need to identify its boundaries.

Usually, the price will start respecting some horizontal support and resistance, forming a range.

I have underlined the boundaries of 2 ranges that we spotted.

Remember This

Once you identified a sideways price action on Gold, with the absence of high impact fundamental news, such a price behavior will most likely continue.

The price will continue respecting the boundaries of the range

• falling from its resistance,

• growing from its support.

What For This

You should patiently wait for a test of a support or resistance of the range first.

In our example, we see a test of a resistance.

We can expect that the price will drop from that.

But the problem is that the underlined resistance is quite wide and from such a perspective, we can not predict the exact level from where it will drop.

Your Best Signal

Multiple time frame analysis will help you to spot an accurate entry signal.

I suggest looking for a channel or a wedge on an hourly time frame.

The price formed a rising wedge on an hourly.

Your signal to sell will be a breakout and an hourly candle close below its support.

It will indicate a highly probable bearish movement to the support of the range.

After a confirmed violation of a trend line, open a sell position immediately or set a sell limit order on its retest.

• Stop loss should be above the highs of the wedge/channel.

• Take profit will be the upper boundary of a range's support.

76 pips of profit were made.

Buying From Support

Using this strategy, we could easily predict a previous bullish movement from a support.

A bullish breakout of a resistance of the wedge provided a strong confirmation.

Entering on a retest of its broken resistance, be TP should have been based on the lower boundary of the range's resistance.

Stop loss should have lied below the lows of the wedge.

Never Neglect Sideways Market

Consolidations may last for days, weeks and even months on Gold.

Not trading it, you will miss a lot of profitable opportunities.

This strategy will help you to trade a sideways ranging market easily.