What is Range in Forex Trading?
We’ve gone through both uptrend and downtrend, so now let’s look at an example of when the market isn’t going up or down. When the market appears to be ‘trending’ sideways, we call this a range. In fact, since there appears to be no apparent trend, another term used to describe this type of market is: trendless.
In a range, the action of the price is confined within the boundaries of support (bottom) and resistance (top) lines. On closer inspection, one notices that the highs of the tops are approximately equal to each other, as are the lows of the bottoms. A range is more likely to break out either above the resistance or below the support.
Where trend-following traders put a lot of weight on uptrends and downtrends, range traders focus on ranges. Range traders identify support as oversold levels of their instrument, and resistance as the overbought area. Their tendency is to buy at the oversold, or support, level and sell at the overbought, or resistance, level.
That’s range in a nutshell! See you soon for the next video, traders.
