Trading Range¶
A trading range is the horizontal price band bounded by a defined support floor and resistance ceiling within which a security trades when supply and demand are balanced. Inside the range there is no trend: rallies fail at the ceiling, declines stall at the floor, and mean-reverting strategies outperform momentum strategies. Ranges end with a breakout or breakdown, and the height of the range calibrates the size of the eventual move.
HOW IT WORKS¶
A valid range requires at least two touches of both support and resistance; three or more touches make the boundaries tradable with high reliability. Range height is calculated as resistance minus support, expressed in dollars and as a percentage of price. Range position — (price − support) ÷ (resistance − support) — shows where price sits within the band: a reading near 1.0 indicates proximity to the ceiling and poor location for new longs. Volume should contract as the range matures and expand decisively on a genuine breakout; rising volume at the ceiling without a break signals distribution rather than accumulation. The standard range trade is to buy near support with a stop below the floor and target the ceiling, or to reverse at the top for short sellers. On a confirmed breakout, the measured-move target equals the breakout level plus the full range height.
IN TAPEBOARD¶
Tapeboard's regime overlay flags instruments trading below ADX 20 as ranging, automatically switching the default strategy context from momentum to mean-reversion. Range boundaries derived from the session high and low structure are drawn directly on the chart, with range position displayed as a 0–1 oscillator in the data panel. Volume analysis tools highlight distribution and accumulation signatures at the boundaries so traders can distinguish genuine tests from stop hunts. Options traders can reference the support and resistance levels as a guide for strike placement when structuring iron condors or short strangles inside an active range.