By L.A. Little of tatoday.com, author of Trade Like the Little Guy.

Steel stocks have witnessed quite a bit of selling pressure over the past six to eight weeks, and given their tendency to make more extreme moves even the general sector exchange-traded fund, the

Market Vectors Steel ETF

(SLX) - Get Report

, has suffered a 30% decline off the highs since early April.

The question, as always: Is now the time to step up and buy one or more of the names in the sector? The answer: probably not exactly. The better trade is to buy and sell the ranges. One stock in the sector that has a long and well-defined range is

Nucor

(NUE) - Get Report

.

Here's a weekly chart that spans almost two years of data and in it you can see the well-defined range for NUE.

From top to bottom over this 18-month consolidation buildout, NUE has traded from a high of around $50 to a low near $36. That represents about a 28% top-to-bottom range, and within that area there's a good 20% range where price has oscillated back and forth several times.

Many times, the sector and the general market will have significant influence on a stock and my personal opinion is that the general market is range-bound for now and will be most likely for many more weeks. If true, you want to buy the bottoms and sell the tops as the stock and the market oscillates around.

In the particular case of NUE, if you drill down to a daily chart, we can get a better sense of where the tighter range lies and where we can expect prices to trade to near term.

Resistance is just overhead and if it turns prices lower again, which I expect it to, then the first trade is probably a buy, not a short-sell in this stock. That buy would be at the bottom of this short chart where the failed under-and-over occurred.

If true, as prices pull back into the $40 range, watch to see what volume looks like at that price point as compared to the early June highlighted bars. If volume dries up comparatively, then that's the buy. If it expands, then wait until the lower areas on the weekly chart are probed and look to buy it there.

Range trades expect the range to hold. You can give it a little room, but you have to have the discipline to pull the trade if it falls too far out of the range. Ranges are essentially floors and if prices fall to a lower floor and cannot quickly capture the previous floor, then a new range or floor will be established. If you are on the wrong side of that trade, you have to take a loss and look elsewhere.

Until next time, keep trading the charts!

At the time of publication, Little had no positions in the securities mentioned, though positions can change at any time.

L.A. Little, author, professional trader and money manager, writes daily on

www.tatoday.com

, a free educational site for traders and investors. He has been featured in numerous publications and is the author of

Trade Like The Little Guy

.

His background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, L.A. espouses a simplistic technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and the qualification of trends, L.A. provides a breath of fresh air to an otherwise crowded room of derivative indicators with the emphasis on technical minutiae.