Sideway Market to identify

Trading Charts & Strategies 📈
1

Hi Sir,
Which indicator is useful to identify sideway market to avoid take trade and which parameter is useful to use it.

With Regards
Vishal Choudhary

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2

Good Question!

@Himanshu_Arora would like to share some thoughts

3

Hi
Volatility indicators might be of use to you, especially Donchian Channel, Bollinger bands. It again depends on which time-frame you trade in. Even in a side-ways market, intraday price action could be swinging up and down giving an impression there is a trend emerging.

As a positional trader, I usually work with Weekly timeframe. I work with Donchian Channel set to 52 period.

All the best.

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Hi @VISHAL1976 @RahulDeshpande
ADX is a great indicator to help you get rid of this issue. The default parameter is 14 and you may continue using the same.
When ADX remains below 20, it indicates a weak trend while wen it starts trading above 20 it signals a strong uptrend or a downtrend. This is that theory also suggests.
However based on my experience a very very strong trend emerges wen ADX trades above 30-32.
So when the adx is below 20, it indicates a rangebound market.

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As per my understanding it’s crucial to use a blend of methods that provide both direct price action and technical indicator confirmation.

  1. Price action Analysis - Identify strong horizontal support and resistance levels on the chart where the price frequently reverses.
  2. Moving Averages-
    Settings: 20-day and 50-day Exponential Moving Averages (EMAs).
    How to Use: A sideways market is suggested when the moving averages are flat and cross frequently.
  3. Bollinger Bands-
    Settings: 20-day period, 2 standard deviations.
    How to Use: Look for narrow bands that run parallel for an extended period, indicating low volatility and a range-bound market.
  4. Average Directional Index (ADX)
    Settings: 14-day period.
    How to Use: An ADX reading below 20 confirms a weak trend, indicating a sideways market.

Effective Strategy:

Combine price action (horizontal support and resistance levels only), exponential moving averages, narrow Bollinger Bands, and a low ADX (below 20) to reliably identify a sideways market. This approach provides a comprehensive view of market conditions, minimizing false signals. Suggesting what I personal use and proven effective for me.

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if market open and trade between high and low of previous day market you can avoid to trade market until have breakout of previous day high and low

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No indicator. You can identify with naked eye on chart. If stock seems to be in a box with too much to and fro action with no clear direction.
Here you can see HDFC Bank monthly chart, stuck in the range from 2 years.

image
image902×482 18.3 KB

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Hi Vishal, Mostly i use Bollinger Bands with the length of 10 and i disable background and median as well. After applying into chart identify whether bands are in narrow or wide if bands are wide that indicates it’s a volitile market and if bands are narrow that indicates it’s a sideways, Hopes this helps you.
"Happy Trading :wink: "