Range Trading with Price Action — Complete Guide

What is Range Trading?

Range trading is the strategy of trading between established support and resistance levels when price is not trending. Markets spend approximately 60-70% of their time in ranges, making this a valuable skill.

Identifying a Range

Characteristics:

• Price bouncing between clear support and resistance
• No clear HH/HL or LH/LL pattern
• ADX below 25 (if using indicators)
• Multiple touches on both boundaries (3+ each)
• Candles have mixed direction (no dominant color)

Range Structure:

Resistance ─────────────────────── (Sell zone)
     ↕ Trading Range ↕
Support ────────────────────────── (Buy zone)

Rules:
- Buy at support (lower boundary)
- Sell at resistance (upper boundary)
- Stop beyond the boundary
- Target: Opposite boundary (or midpoint for partials)

Range Trading Strategy

Buy at Support:

1. Price approaches range support
2. Wait for bullish rejection candle (pin bar, engulfing)
3. Enter long above the rejection candle
4. Stop: Below support + buffer (5-15 pips)
5. Target 1: Range midpoint (50% of range)
6. Target 2: Range resistance
7. R:R: Typically 1:2 to 1:3

Sell at Resistance:

1. Price approaches range resistance
2. Wait for bearish rejection candle
3. Enter short below the rejection candle
4. Stop: Above resistance + buffer
5. Target 1: Range midpoint
6. Target 2: Range support

When Ranges Break

Breakout Signals:

• Compression forming at one boundary (higher lows into resistance)
• Volume increasing on approach to boundary
• Strong impulsive candle closing beyond range
• Pullback holds outside the range (doesn't re-enter)

Strategy After Range Break:

1. Range breaks (strong close beyond boundary)
2. Wait for retest of broken boundary
3. Old resistance becomes new support (or vice versa)
4. Enter on the retest with trend
5. Stop: Back inside the range
6. Target: Range width projected from breakout (measured move)

Range Trading Rules

1. Only trade clear ranges — 3+ touches on both boundaries minimum
2. Trade the bounce, not the break (until confirmed)
3. Reduce size inside range — It WILL break eventually
4. Set alerts at boundaries — Don't over-watch
5. Be ready to flip — When range breaks, switch to breakout mode
6. Stop at boundary — Never hold through a range break

Related Topics

• Support & Resistance — Range boundaries
• Compression — Compression within ranges
• Breakouts — Range breakouts
• Fakeouts — False range breaks
• Confirmation — Entry confirmation at range edges