Organize your market knowledge and trading strategy along this important trend/range axis. Follow the skills of the momentum trader when ranges yield to breakouts and breakdowns. But recognize when price boundaries contract and predictable patterns emerge. Then use these formations to execute the contrary tactics of the swing trader.

Can you see this order within price movement when you look at a chart? Can you identify the current market state and trade with the flow? If not, you still have some work to do. Here's a list of 10 characteristics to help you distinguish between trending and range-bound markets.

Price movement demonstrates both directional trend and non-directional range activity. Range motion alternates with trend movement. Trends are classified by their upward or downward bias.

Trends change and reverse at certain key points in price development. Movement out of a range will either continue the existing trend or reverse it.

Ranges are classified by their repeating patterns, their bias for continuation or reversal, and the nature of the trends that are expected to follow them.

Ranges churn in a state of negative feedback in which price movement pulses between minimum and maximum points but does not build direction (momentum). Trends exist in a state of positive feedback in which price movement builds incrementally in a single direction.

Breakouts and breakdowns from ranges are characterized by their shift from a state of negative feedback to positive feedback.

Nondirectional price movement arises from a state of high volatility associated with the end of positive feedback. Directional price movement arises from a state of low volatility associated with the end of negative feedback.

Range volatility is highest at the interface between the prior trend and the inception point of the new congestive pattern. Range volatility is lowest at the apex point just prior to inception of the new trend.

Wide range bars, high volume and low price rate of change characterize high-range volatility. Narrow range bars, low volume and low price rate of change characterize low-range volatility.

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Negative feedback registers on technical oscillators as shifts between overbought and oversold markets but does not register on momentum gauges.

Positive feedback registers on momentum indicators as directional movement but gives false readings on technical oscillators.