Ranging Market
A ranging market (also called sideways or choppy market) is when price oscillates between support and resistance without establishing a clear trend. Range-bound conditions frustrate trend traders but create opportunities for mean-reversion strategies.
Understanding the Concept
• Price respects upper resistance and lower support • Trend-following indicators give false signals • Range traders buy support, sell resistance • Eventually breaks out into a trending phase
Real-World Example
Ethereum trades between $2,800 support and $3,200 resistance for two months. Breakout attempts fail repeatedly. Range traders profit by buying near $2,800 and selling near $3,200. Trend traders keep getting stopped out. Finally, it breaks above $3,200 with conviction, ending the ranging phase.
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