For a certain time, range market trading is defined as the vertical price movements between a resistance ceiling and a support floor. These ranges are common in all financial markets, with the top of a security’s trading range providing price resistance and the bottom of the trading range providing price support.
What is a range-bound market?
A range-bound market is one in which price bounces between a specific high price and a low price. The high price acts as a major resistance level in which price can’t seem to break through. Likewise, the low price acts as a major support level in which price can’t seem to break as well.
How do you know if a market is turning to range?
Once you see that market can’t create new higher high during upward tendency or new lower low during downward tendency – this could be early sign that market is turning to range. If you want to avoid trading the ranging market you will need to wait until the price breaks the range borders either to the upside or to the downside.
How to avoid ranging market?
To avoid ranging market you have to pay attention to the first sign of ranging. Once you see that market can’t create new higher high during upward tendency or new lower low during downward tendency – this could be early sign that market is turning to range.
