A range market—also known as a sideways market—occurs when the price of a financial instrument moves over an extended period between a clearly defined support zone and resistance zone without forming a sustained trend in either direction.
During such phases, buying and selling pressure are largely in balance. Trend-following strategies often perform poorly in range markets because they generate repeated false signals.
Instead, range-based strategies can be used, which trade near the boundaries of the range—buying near support and selling near resistance.
Identifying a range market is an important part of market analysis, as it influences the choice of an appropriate trading strategy.
