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Trading Range

A trading range occurs when a stock or average moves up and down between a consistent high and low for an extended period of time (days, to weeks, to months). The bottom of the range becomes fairly solid support as the top becomes fairly solid resistance the more times either holds. We play stocks within the trading ranges if they are loose enough to give us some room to maneuver, e.g., a 5 point range or more. A tight trading range is one that is significantly narrower than a particular stock?s usual trading fluctuations. A tight trading range on low volume is usually a very good indicator that a move up is coming.

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