What are ranging markets?
The market is said to be ranging when the price of ais making the same highs and lows a number of times. The most common definition of a ranging market is when the price hits the same and levels three times.
Learn more about support and resistance:
A ranging market with lowcan also be called a .The opposite of a ranging market is a , where the market is either in an or .
The following chart shows an example of a ranging market, including the green resistance and red support lines:
Trading in a ranging market
Traders may look to buy or sell an asset when the price breaks through either the support or resistance level.
For example, in the chart below, the price encounters the same support and resistance levels several times before breaking out of the range. Aeventually occurs after the sellers overpower the buyers and break through the established support level, at which point traders may look to sell.
number_1 Price finds resistance in a range
number_2 Price finds support in a range
number_3 Price finally breaks out of the range through support
Read more about trading in ranging and trending markets: