The term ranging trend refers to the price action of a financial asset trading around the same highs and lows numerous times in a row. When a price hits the same [support] and [resistance] levels a minimum of three times in a row it is referred to as a ranging market.
Traders will keep an eye out for new trading opportunities by looking to buy or sell an asset when the price breaks through either a support or a resistance level.
Range traders generally believe that no matter which direction a financial asset moves, it will most likely return to its point of origin. It is also a common assumption that prices will surpass the same levels many times, and therefore the goal is to repeatedly reap the benefits of those oscillations over some time.
Key takeaways:
- The term ranging trend is referred to when we see prices for financial assets make the same highs and lows numerous times in a row.
- Range traders generally believe that no matter which direction a financial asset moves, it will most likely return to its point of origin.
- When a price hits the same support and resistance levels a minimum of three times in a row, it is referred to as a ranging market.