Apiary Fund Blog

What Is a Range Bound Market?

[fa icon="calendar"] Nov 23, 2019 6:00:00 AM / by Brigette Dumas

A range-bound market is a scenario where there's price blockage within the range on the price chart. Which means the general price action is situated between two specific levels, the high of the range, and the low of the range. You might hear some traders refer to range-bound market trading as “price consolidation,” “congestion phase,” or “flat market.” When the Forex pair is not going either up or down, it is considered to be in “consolidation phase,” or “horizontal phase.”

The high part or the top of a chart is considered to be the resistance area, and the low part or bottom of the chart is considered to be the support area of the chart. The visualization of the high and the low points are the current range state for the currency pair. One of the pro’s for range-bound trading is when you have an identifiable range on the chart, you have a clear indication of a high or low horizontal channel. Which means you know when to expect a more than likely price bounce in the opposite direction.

One con of range-bound trading you should keep in mind is that tight trading ranges tend to occur frequently during an absence of noticeable trading volatility. This means the market pressure is weak and neither the “bulls” or the “bears” could gain control, so a breakout could be considered suspicious or a “fakeout.” Another con is uncertain during range channels because of low trading volumes, which can often lead to false breakouts.

A range breakout means that the price action is attempting to continue the current price move in the direction of the breakout. Often, after you see a big push range-breakout, the price enters a new trend in the direction of the break. The range-breakout trading approach is another way to profit from a ranging market condition.

The idea of this range trading strategy is to enter the market if the price creates a breakout through the upper or lower level, so it’s best to enter the market in the direction of the breakout. You want to enter the market based on the assumption that the price is likely to create a trend after breaking out of the range area. The Apiary Fund is the source I use to gather and obtain all my trading information. The Apiary Fund is a brokerage company that teaches, informs and guides you through the Forex market with professional coaches that have been trading successfully for years. I heard about range-bound trading through a coach and immediately wanted to try it with my strategy. The thing about Forex is, it is constantly evolving, and as a Forex trader, you need to be willing to evolve and grow along with it, or you will find yourself left behind.

 

Topics: Apiary Fund, learn to trade, vocabulary, trading terms, momentum, range trading, range bound

Brigette Dumas

Written by Brigette Dumas

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