Range Trading Definition – What is Range Trading? | CFI LB

range trading

The term “range trading” refers to areas in the financial markets when a market moves steadily between two prices or levels (or support and resistance areas) for a decisive period. These ranges can be used to provide trading opportunities in times when a market is not displaying an obvious long-term trend in either direction.

 

Examples of range trading

 

Rectangular range - When a trader encounters a rectangular range and sees sideways or horizontal price movements between lower support and upper resistance levels.

 

Diagonal range - Diagonal ranges in the form of price channels are particularly common forex chart patterns.

 

Continuation ranges - A continuation range is a chart pattern that unfolds within a trend. Triangles, wedges, flags, and pennants can all be categorized under this range.

 

Key takeaways:

  • The term “range trading” refers to areas in the financial markets when a market moves steadily between two prices
  • These ranges can be used to provide trading opportunities in times when a market is not displaying an obvious long-term trend in either direction.
  • Three common examples of ranges are rectangular range, diagonal range, continuation ranges.
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