What are ranging markets?
The marketWhat are value stocks? A value company is a company that app... More is said to be ranging when the priceWhat are value stocks? A value company is a company that app... More of a financial instrument is making the same highs and lows a number of times. The most common definition of a ranging marketWhat are ranging markets? The market is said to be ranging w... More is when the priceWhat is price? The price is the measure of the value of good... More hits the same support and resistance levels three times.
Learn more about supportWhat are "support levels" in trading? A support level is a... More and resistanceWhat are "resistance" levels in trading? A resistance level ... More:
A ranging market with low volatility can also be called a flat market. The opposite of a ranging market is a trending market, where the market is either in an uptrend or downtrend.
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. A breakout eventually occurs after the sellers overpower the buyers and break through the established support level, at which point traders may look to sell.
(1) Price finds resistance in a range
(2) Price finds support in a range
(3) Price finally breaks out of the range through support
Read more about trading in ranging and trending markets: