Range trading and failed boundaries

Prerequisite: A repeatable multi-timeframe process

On a small screen, scroll the figure sideways or open it full size.

Learning objective

Frame two-sided price movement while allowing the range to end.

A range contains repeated movement between broadly horizontal areas without sustained directional progress. Mark both edges using information already available; a range visible only after many future swings could not have been traded at its first touch. Define a minimum number of observations and an acceptable width.

Range rules often study reactions near edges rather than chasing movement in the middle. The midpoint can be an information reference but not automatic support or resistance. A close beyond an edge challenges the range assumption; specify whether you pause the method immediately or require additional confirmation.

Narrow ranges can be consumed by spread and commission. Wider ranges still carry breakout and news risk. If a series of previous bounces encourages adding repeatedly to a losing position, total exposure can grow just when the boundary fails. Risk limits must survive the range-ending scenario.

Common mistakes

Do not assume that a range must persist because it has persisted so far, or redraw edges to hide every failed reaction.

Practice

Draw a range and calculate edge-to-edge space net of an assumed round-trip cost. Add a failed-edge scenario and specify a rule preventing repeated increases in exposure.

Sources & further reading

• IG Academy — What is breakout trading? (range comparison)