Range trading on GBPUSD uses repeated support and resistance levels where price oscillates between well-defined highs and lows. A disciplined workflow centered on candlestick formations reduces guesswork and improves risk control. Below is a practical, step-by-step approach you can apply on intraday or swing timeframes.

1. Identify range boundaries

Start with a higher timeframe (daily or 4-hour) to identify major horizontal boundaries, then drop to a lower timeframe (1-hour or 15-minute) for execution clarity. Define boundaries by marking the last several visible swing highs (resistance) and swing lows (support) where price has reversed at least twice. Use a minimum lookback of 20–50 bars to avoid marking temporary pauses as ranges. Confirm the range by checking that price has bounced between these levels multiple times and lacks a clear trend slope.

2. Observe candlestick formations at boundaries

Focus on price behavior when GBPUSD approaches the defined support or resistance. Key candlestick signals for rejections and confirmations include:

• Pin bars and long-tailed wicks indicating rejection of higher or lower prices.
• Bullish or bearish engulfing candles showing strong reversal pressure.
• Doji or spinning tops within the boundary zone suggesting indecision, often preceding a breakout or retest.
• Two- or three-candle patterns: e.g., a rejection wick followed by a confirming close in favor of the range direction.

Wait for the candle to close and for volume/volatility confirmation when possible; avoid entering on intra-bar moves alone.

3. Set entry and exit rules based on confirmations

Define explicit rules before placing a trade. Typical entries include:

• Conservative entry: Wait for a full confirmation candle that closes away from the boundary in the expected direction (e.g., bullish engulfing closing above the last small consolidation at support).
• Aggressive entry: Enter on the first rejection wick with a tighter stop, accepting higher trade failure risk.

Exit rules:

• Primary target: the opposite boundary of the range.
• Partial profit: take 30–50% at mid-range and move stop to breakeven.
• Trailing exit: if price breaks structure in your favor, trail using swing highs/lows or a fixed ATR-based distance.

4. Stop-loss placement and risk management

Place stop-loss orders where the candlestick signal becomes invalid. Practical stop placements:

• Just beyond the rejection wick or beyond the nearby swing high/low (2–3 pips plus spread on low timeframes; use wider margins on higher timeframes).
• ATR-based stop: 1–1.5× ATR(14) from your entry to allow for typical GBPUSD volatility.

Risk per trade should be a fixed percentage of your account (commonly 0.5–2%). Calculate position size so that the dollar risk equals this percentage given your stop distance.

5. Routine evaluation of trades

Review your range trades weekly and monthly. Track metrics: win rate, average R:R, maximum drawdown, and expectancy. Log the candlestick patterns that worked and those that failed. Adjust parameters (stop distance, confirmation rules, timeframe) only after at least 30 trades or one month of consistent data.

Common mistakes to avoid

1. Trading too aggressively outside established range boundaries.
2. Failing to recognize breaking patterns that indicate potential range shifts.
3. Neglecting risk management despite favorable risk-reward setups.

Checklist before entering a GBPUSD range trade

1. Define clear range boundaries on the chart.
2. Observe candlestick formations near these boundaries.
3. Establish entry and exit rules based on formations.
4. Set appropriate stop-loss orders to manage risk.
5. Review results regularly and adjust strategies as necessary.

Applying this workflow consistently will reduce emotional entries and help you treat GBPUSD range trading as a repeatable process. Keep notes, measure performance, and let the data drive incremental improvements to your candlestick confirmations and risk rules.