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Price Action

What Is a Trading Range

A trading range is a stretch where the highs keep stopping at one level and the lows at another, so the price moves up and down between two edges without leaving. This paper shows you a real one drawn from six weeks of gold in the summer of 2024, the three lines that describe a range, the range on the daily chart, how a price is read by where it sits inside, and two alerts that watch the edges on your platform.

Difficulty
Advanced
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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Two levels and the price between them

A trading range is a stretch where the highs keep stopping at one level and the lows at another. From 5 July to 15 August 2024 gold moved between a top near 2484 dollars and a bottom near 2349. The highs of 17 July and 2 August stopped at the top; the lows of 9 July, 25 July and 5 August stopped at the bottom; every close in between sat inside. For six weeks the price went up and down between the two edges, but not away from them.

The three lines

A range is described by three lines and two numbers. The top is the level the highs keep stopping at; the bottom is the level the lows keep stopping at; the middle is halfway between, where the price is furthest from both edges. The height is the distance from bottom to top — 134 dollars here — and the length is how long the price has stayed inside, six weeks. The rectangle on this shelf is a range with a tidy outline; a trading range is the general word.

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