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As might be expected in a trading range, the next bar reversed, closing near its lows. Although it doesn't work perfectly, this method of counting segments to identify a trend, and understanding when a market is in congestion, has wonderfully kept me out of untradable trading ranges and congestion areas for many years.

So, although this part of the book may be not as exciting, the wise trader will pay great heed to what I'm showing here. Knowing when to trade and when to sit and wait is worth a fortune - it has been for me.

Still, because I will not prejudge a market - I let it tell me what it wants to do - I dutifully drew my trend line and numbered my segments. I called in a buy order above the high and waited.

The next bar again confirmed the trading range, and killed the uptrend. Just for grins, I counted the bars in the range so far. There were fifteen. I've drawn a box around the bars.

I like to test my methods to see if they still work. To make it a bit easier for me to finish this series, I'm going to change the chart scaling a bit. You may not even notice.

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