Trading Range
The price band between established support and resistance levels within which a security consolidates without a clear directional trend.
What is Trading Range?
A trading range (or consolidation zone) forms when a security's price oscillates repeatedly between a defined support floor and resistance ceiling, reflecting a temporary equilibrium between buyers and sellers where neither side has sufficient conviction to push prices decisively in one direction. Technical traders often buy near support and sell near resistance within the range, collecting the spread as profit. The width of the range determines risk-reward ratios and position sizing. A breakout above resistance or breakdown below support — particularly on elevated volume — signals the end of the range and the beginning of a new trend, providing traders with a higher-conviction directional trade.
Example
Intel's stock traded in a range between $25 (support) and $30 (resistance) for approximately six months in 2023. Range-bound traders bought near $25 and sold near $30 repeatedly. In late 2023, a high-volume breakdown below $25 ended the consolidation and initiated a sustained downtrend.
Source: Investopedia — Trading Range