Trending-range

A 'trending-range' describes a market or asset's price movement characterized by a prevailing direction (upward or downward) within defined upper and lower boundaries. Unlike a purely directional trend, a trending-range exhibits periods of consolidation or sideways price action where the price oscillates between these boundaries before potentially continuing the trend. It combines elements of both trending markets and ranging markets, making it important for technical analysis. The boundaries are key areas of support and resistance, offering potential entry and exit points for traders seeking to capitalize on the range's predictability and trend's bias.

Trending-range meaning with examples

• The stock has been in a bullish trending-range for several months, consistently making higher lows and higher highs, but often consolidating near the resistance level before breaking out. Traders focused on buying near the support level, placing stop-losses below it to minimize risks. A breakout above the resistance could signal a strong bullish continuation.
• Following a steep decline, the commodity's price entered a bearish trending-range. The price made lower highs and lower lows, moving downward but periodically finding temporary support. Swing traders used the resistance and support levels as entry and exit points to profit from shorting the market on the way down. The market is now eyeing a potential support breach.
• Before a major earnings announcement, the currency pair entered a narrow trending-range. Uncertainty kept the price from moving drastically but still created potential. Options traders capitalized on this situation by selling covered calls and covered puts or playing the straddle to prepare for the volatility after the report, depending on their risk tolerance.
• Cryptocurrency prices frequently exhibit trending-ranges. Following a period of sharp gains, Bitcoin entered a sideways pattern with a defined resistance and support creating a consolidation period. Many traders waited for a break of either the upper or lower boundary before implementing their strategies, indicating a potential shift in the broader market.
• A specific financial index displayed a trending-range, with the price gradually increasing, punctuated by minor pullbacks to a defined support level. Investors could employ a 'buy the dips' strategy or look to buy the support to take advantage of the overall upward trend. Monitoring the movement to the resistance level would be a key move to manage risk.