Ranging market

A ranging market, also known as a sideways or channel market, is characterized by price movement confined between discernible support and resistance levels. The price oscillates horizontally, failing to establish a clear upward or downward trend. This typically occurs when buyers and sellers are in equilibrium, preventing significant price progression in either direction. Traders identify these bounds to anticipate price reversals.

For a retail trader, ranging markets present opportunities for short-term trades by buying near support and selling near resistance. However, false breakouts can lead to losses if stop-loss orders are not strategically placed. The absence of strong trends often results in lower volatility, which can reduce potential profit per trade and increase the impact of spread costs, such as 1 pip on EUR/USD.