Trading in Contained Markets: When Breakouts Don't Happen

Good morning traders! I'm about a week into my holiday now, which explains why the videos have been coming at a slower pace lately. Despite being away, I've received quite a few emails asking me to revisit a particular trading scenario: when price movements fail to break out of a contained area.

Let me walk you through what this looks like and, more importantly, how to identify these situations before they trap your capital in sideways markets.

Identifying Contained Markets

When setting up your trading lines on a 30-minute chart (though I'm demonstrating on a 15-minute timeframe for clarity), pay close attention to the market's initial behaviour. The first warning sign appears when price pushes through a level but then fails to continue its momentum.

Normally, we're looking for decisive breakouts where the market breaks away cleanly, allowing us to enter and ride the move to our predetermined targets. But sometimes, the market has other plans.

What Market Makers Are Doing

This behaviour reflects the market makers' business model in action. When you see price contained within a tight range, it's often because market makers are shutting down directional movement. They profit from the spread and from collecting stop losses, not necessarily from trending markets.

In the example I'm showing, notice what happens as the Asian session opens. The market breaks downward, then pushes back up, but remains contained within the previous structure. This containment is crucial to recognise - the market is being deliberately shut down.

You can spot this by comparing ranges: in this case, a 68-point range compared to the previous 116-point range. Everything about this price action screams that the market is being constrained. The flattening of the floating zones further confirms this assessment.

When to Stay Out vs When to Enter

The key factor here is recognising when the market is trapped versus when it's likely to break free. Before committing capital, always ask yourself: "Where is this market likely to break free from all this containment?"

Let me give you another example on the 5-minute chart. Assume that a particular zone represents our overall containment area, with price moving down and then back up within that zone. We might consider selling under a certain level, but only once the price action shows signs of breaking free from the overall containment.

Using PAT for Better Decision-Making

This is precisely where my Proprietary Analysis Tool (PAT) indicator becomes invaluable. In my trading mentorship programme, I teach traders how to interpret these contained market scenarios using PAT's unique signals. The indicator helps identify when market makers are likely to release their grip, allowing for more profitable entries.

I've developed PAT through years of professional trading experience, and it's become an essential part of my trading toolkit. It's not about blindly following indicator signals, but rather understanding the market maker activity that drives price action.

Professional Trading Mindset

Learning to spot these contained markets is part of developing a professional trading mindset. In my trader training sessions, I emphasise patience during these periods. The most skilled traders I've mentored often make their biggest profits not from forcing trades in contained markets, but from waiting for clear breakouts.

I remember sitting for nearly three days watching a contained market on the EUR/USD last year, resisting the urge to enter. When it finally broke free, I caught a move that paid for my entire month. That's the discipline professional trading requires.

Final Thoughts

I hope this helps answer some of the questions I received this morning. I'll dive deeper into this topic when I return from holiday, but this should provide a good starting point.

If you're struggling with identifying these patterns or want to learn more about interpreting market maker activity using my proprietary methods, do consider reaching out about my personal trading mentorship programme. I've helped hundreds of traders transition from frustrating, choppy trading to consistent profitability by understanding what's really happening behind price movements.

Have a great trading day, and I'll catch up with you very soon!