Range

A range-bound market moves sideways between defined support and resistance levels without establishing a clear trend. Price bounces back and forth within this channel, and the key levels contain the movement — at least until a breakout occurs. Ranges can last for hours, days, or even weeks.

Range trading strategies buy at support and sell at resistance, profiting from the back-and-forth movement. Oscillators like RSI and Stochastic work well in ranges because overbought/oversold signals are more reliable when price is contained. Trend-following indicators, conversely, produce whipsaws and false signals in ranging conditions.

The trickiest part of range trading is identifying when the range is about to break. All ranges eventually end in a breakout, and if you're positioned for a bounce when price breaks through, the loss can be sharp. Placing stop losses outside the range boundaries protects against this, though it means accepting slightly worse risk-reward on each range trade.