Figure 4: Trading range with stochastic

In Figure 4, SPH exhibits the same trading range characteristics as the Celestial example we discussed earlier. It is observed that the price traded near the support on two occasions in September 2002 and October 2002 and their Stochastic was in the oversold region. The price then traded higher towards the resistance. Investor or trader can then look to book their profits near the resistance.

In this article, we have discussed how to trade in a sideway market where prices are trading in a range. By utilizing support and resistance together with the popular Stochastic oscillator, we have looked for the high probability trades. The strategy described in this article can be automated using ChartNexus XPertTrader which is a software that screens the whole market for stocks satisfying defined technical criterias.