What it means
Range edges collect stops on both sides, so they are prime liquidity for breakouts and sweeps.
In practice
In a range, traders either trade from edge to edge, selling near the top and buying near the bottom, or wait for price to leave. The midpoint is the least attractive place to open a trade.
The longer a range lasts, the more orders build up beyond both edges, which is why the eventual breakout tends to be strong.
What to watch for
Ranges often push briefly through one edge to collect the stops there and then head the other way. Trend-following tools such as moving average crossovers give one false signal after another while price is going sideways.
Related terms
4 terms- SupportA price area where falling prices have stopped before, because buyers stepped in.
- ResistanceA price area where rising prices have stopped before, because sellers stepped in.
- BreakoutPrice closing beyond a level or pattern, ideally on strong volume, and staying there.
- Liquidity sweepPrice wicking through an obvious high or low to take the stops, then closing back inside and reversing.