offer an optimal chance to buy low, while traders sell high when assets reach the resistance trend line. This area where prices oscillate back and forth is called the range, also known as the price channel.
The upside is significantly lower than timing a breakout but markets don’t permanently trend in one direction. Sometimes, the market will pause and move sideways before continuing its prior trend. On the other hand, the market may be in a period of indecision before the opposition forces a reversal.After traders have identified the range, the most straightforward strategy is to place a buy order near support and a sell order near resistance.
Even though a market may be ranging, thereby creating seemingly identical patterns, there is no certainty when the asset will approach or break the trend lines. Assets are either stagnant or locked in until the buy or sell price levels are triggered. Furthermore, traders who don’t set stop-loss orders are exposed to additional risk of loss.