How to Create a Fresh Trading Range After a Large Selloff
UB’s Guide to Identifying & Trading New Ranges After a Sell-Off
Defining a New Range Post-Sell-Off
Step 1: Ignore the Initial Sell-Off Wick
The lowest wick of the sell-off is not the range low.
Instead, mark the first bounce high after the drop - this acts as a temporary range high.
The next significant low after a rejection forms the temporary range low.
Step 2: Let Price Stabilize
Avoid trading immediately after a sell-off - allow the range to establish naturally.
The range high becomes stronger if price rejects that level multiple times.
The range low is confirmed after multiple bounces or liquidity sweeps.
Trading Strategy: Liquidity Sweeps & Reclaims
Long Setup (Buying at the Range Low)
Identify untapped liquidity below the range low.
If price sweeps the low but quickly reclaims it, this signals a long entry.
Stop-loss: Below the deviation wick.
Take profit: Target the range high.
Short Setup (Selling at the Range High)
If price sweeps the range high but fails to hold above, this signals a short entry.
Stop-loss: Above the deviation wick.
Take profit: Target mid-range or the range low.
Risk Management & Profit-Taking
Stop-Loss Placement
Long trades: Below the final liquidity sweep.
Short trades: Above the deviation wick.
Take-Profit Strategy
TP1: Mid-range (equilibrium).
TP2: Opposite end of the range.
TP3: If price breaks out, target the next liquidity zone.
Conclusion
Ignore panic-driven wicks - focus on reaction zones.
Wait for range confirmation before entering trades.
Use liquidity sweeps & reclaims to time entries effectively.
Manage risk with well-placed stop-loss and take-profit levels.
This strategy ensures high-probability trades while avoiding false breakouts.