Trading ranges show the highest and lowest closing price that a currency pair has traded within a specific time frame.
The difference between the highest and lowest price is the "range".
Trading ranges are used as a technical indicator by traders who view the high and low as important support and resistance levels to closely monitor.
The difference between the highest and lowest price is the "range".
Trading ranges are used as a technical indicator by traders who view the high and low as important support and resistance levels to closely monitor.
For example, as a currency pair trades within its 1-year trading range (the range that exists between the 1-year high and the 1-year low), traders may show increased interest as the price nears either the high or the low.
If the price is near its 1-year LOW, traders may look to go long if they think the low will hold as a support level. If the currency pair continues to fall though and creates a new low, breakout traders may look to go short since the previous low failed to hold as a support level.
If the price is near its 1-year HIGH, traders may look to go short if they think the high will hold as a resistance level. If the currency pair continues to rise though and creates a new high, breakout traders may look to go long since the previous high failed to hold as a resistance level.