# Range Trading > Range trading buys near support and sells near resistance while price moves sideways. Learn how to identify ranges, time entries and exit when a range breaks. Source: https://learn.tradelabsai.com/strategies/range-trading/ Track: Strategies and Styles · Level: Intermediate · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "Range Trading", https://learn.tradelabsai.com/strategies/range-trading/ Range trading is a strategy for sideways markets. When price bounces between a clear support level and a clear resistance level, a range trader buys near the bottom of the range and sells near the top, or shorts near the top and covers near the bottom. Markets spend a large share of their time in ranges rather than strong trends, so range trading complements trend and breakout strategies. The key skill is recognising when a range exists and when it is ending. ## Identifying a range A tradable range usually has: - **At least two touches** of both support and resistance. See [Support and Resistance](https://learn.tradelabsai.com/price-action/support-and-resistance/). - **A flat or sideways structure:** no clear higher highs or lower lows. See [Range Structure and Consolidation](https://learn.tradelabsai.com/price-action/consolidation/). - **Enough width** for the reward to cover risk and costs. - **Flat moving averages,** often with price crossing back and forth. - **A low trend strength reading,** for example ADX below about 20. See [ADX (Average Directional Index)](https://learn.tradelabsai.com/indicators/adx/). ## How range trades work | Step | Long side | Short side | |---|---|---| | Entry zone | Near support | Near resistance | | Confirmation | Rejection candle, oscillator turning up | Rejection candle, oscillator turning down | | Stop | Below support, outside normal noise | Above resistance | | Target | Middle of range or near resistance | Middle of range or near support | Oscillators such as [RSI (Relative Strength Index)](https://learn.tradelabsai.com/indicators/rsi/) and the [Stochastic Oscillator](https://learn.tradelabsai.com/indicators/stochastic-oscillator/) are popular in ranges because overbought and oversold readings work better when there is no strong trend. **Example: Trading a range in a currency pair** EUR/USD has traded between 1.0800 and 1.0950 for three weeks, with three touches of each level. Price falls to 1.0810 and forms a hammer candle while RSI rises from 30. The trader buys at 1.0815 with a stop at 1.0780 (35 pips risk) and targets 1.0930, just below resistance (115 pips). The reward to risk ratio is about 3.3. Price reaches 1.0925 four days later and the trader exits. See [Hammer and Hanging Man](https://learn.tradelabsai.com/candlesticks/hammer-and-hanging-man/) and [Pips and Pipettes](https://learn.tradelabsai.com/forex/pips-and-pipettes/). ## Where to take profits Many range traders exit before the opposite boundary, because price often stops short of it. Common choices are: - **The midpoint** of the range for a conservative target. - **Just inside** the opposite boundary. - **Partial exits** at the midpoint and near the boundary. See [Scaling Out and Partial Profits](https://learn.tradelabsai.com/position-management/scaling-out-and-partial-profits/). Volume profile can help: the point of control inside a range often acts as a magnet. See [Point of Control and Value Area](https://learn.tradelabsai.com/volume/point-of-control-and-value-area/). ## When ranges end Every range eventually breaks. The biggest risk for range traders is fading a move that turns into a real breakout. Warning signs include: - **Compression:** swings get tighter towards one side, such as higher lows pressing into resistance. See [Ascending Triangle](https://learn.tradelabsai.com/chart-patterns/ascending-triangle/). - **Volume rising** on moves towards one boundary. - **Closes beyond the boundary,** not just wicks. - **A change in the broader market or news backdrop.** When a range breaks, exit range trades immediately, and consider switching to [Breakout Trading](https://learn.tradelabsai.com/strategies/breakout-trading/) rules. ## Range trading and mean reversion Range trading is a form of [Mean Reversion](https://learn.tradelabsai.com/strategies/mean-reversion/): it bets that price will return towards the middle after reaching an extreme. The difference is that range trading uses visible horizontal levels, while broader mean reversion strategies may use statistical measures such as distance from a moving average. ## Common mistakes - **Trading ranges that are too narrow** for costs and normal noise. - **Holding on after a range breaks,** hoping it will return. - **Placing stops exactly at support or resistance,** where wicks and stop runs often reach. See [Liquidity Sweeps and Stop Hunts](https://learn.tradelabsai.com/smart-money/liquidity-sweeps-and-stop-hunts/). - **Forcing range trades in trending markets.** ## Frequently asked questions ### What is range trading? A strategy that buys near support and sells near resistance while price moves sideways between them. ### What indicators work best for range trading? Oscillators such as RSI and the stochastic oscillator, along with ADX to confirm a lack of trend and volume profile to find key levels. ### How do I know when a range is about to break? Watch for tightening swings, rising volume towards one side and decisive closes beyond the boundary. Next, learn to trade strength itself with [Momentum Trading](https://learn.tradelabsai.com/strategies/momentum-trading/). ## Continue learning - Next lesson: [Momentum Trading](https://learn.tradelabsai.com/strategies/momentum-trading/) - Previous lesson: [Breakout Trading](https://learn.tradelabsai.com/strategies/breakout-trading/) - Related: [Breakout Trading](https://learn.tradelabsai.com/strategies/breakout-trading/): Breakout trading enters when price moves out of a range or past a key level. Learn setups, volume and volatility filters, stop placement and how to handle fakeouts. - Related: [Range Structure and Consolidation](https://learn.tradelabsai.com/price-action/consolidation/): Consolidation is when price moves sideways between support and resistance. Learn to identify ranges, trade them, spot breakouts and avoid range traps. - Related: [Support and Resistance](https://learn.tradelabsai.com/price-action/support-and-resistance/): Support is where buying tends to stop a fall; resistance is where selling tends to stop a rise. Learn to draw levels, judge their strength and trade them well. - Related: [Mean Reversion](https://learn.tradelabsai.com/strategies/mean-reversion/): Mean reversion trades bet that prices stretched far from their average will come back. Learn the signals, z scores, examples and the risk of fading strong trends. - Related: [RSI (Relative Strength Index)](https://learn.tradelabsai.com/indicators/rsi/): The RSI measures the speed and size of recent price moves on a 0 to 100 scale. Learn the formula, overbought and oversold levels, divergence and how to trade it.