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.