Range Trading: Strategy and Examples

Range trading involves exploiting the fluctuations of a market that oscillates between a floor and a ceiling without a clear direction. This method entails buying near support and selling near resistance as long as the zone remains valid. Between late February and early April 2025, Bitcoin illustrated this concept by staying between $76,000 and $85,000 for 52 days, a phase termed 'time-related capitulation.' A trader could have bought around $76,000-$77,000 and sold around $84,000-$85,000 multiple times without anticipating a bullish trend. This trend eventually emerged, propelling Bitcoin beyond $126,000 in October 2025. A similar pattern occurred in late 2025 and early 2026, with a new range between $80,000 and $95,000. Range trading requires strict discipline, as it is crucial to recognize the end of a consolidation zone. Tightening Bollinger Bands can signal the end of a compression and an imminent move. This approach allows traders to generate regular income in a often stagnant market, provided they adhere to clear levels and exit as soon as a support or resistance gives way.

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