A range-bound market is one in which price bounces between a specific high price and a low price.
The high price acts as a major resistance level in which the price can’t seem to break through.
Likewise, the low price acts as a major support level in which the price can’t seem to break as well.
We could classify the market movement as horizontal, ranging, or sideways.
It’s also known as a “choppy market” or simply as “being choppy“.
A choppy market is the opposite of a trending market.
Kind of like choppy waves in the ocean.
In a choppy market, there is no clear direction, and the price just “chops around” or “chops up and down” and trades within a very narrow range.
Trend traders tend to get “chopped up” in choppy markets.
What is the favorite food of a range-bound trader?
Okay, let’s get back on topic. Chop chop!