How to tell when the market is ranging

A range market is contained between Support & Resistance.
A textbook example looks something like this:

4-1

Now, before the light bulb in your head goes off with “buy low and sell high,” I want
you to see the reality of trading range markets.
Because, in the real world, you get variations like:
1. Range expansion
2. Range contraction

Range expansion
This occurs when the market does a false breakout and trades back into the range,
thus expanding the “space” between Support & Resistance.
Selling at resistance would get you stopped out as the price breaks above the
resistance only to trade back into the range.

An example:

4-2

Range contraction
This occurs when the market enters a period of low volatility, usually due to an
impending news release.
Looking to “buy low sell high” would put you on the sidelines, as the markets go
into a tighter consolidation.
Here’s what I mean:

4-3

Personally, I find range expansion and contraction one of the hardest markets to
trade, and I usually stay out of it.

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