| Support and Resistance in Range-bound Markets |
|
One simple way to use support and resistance in trading is to simply trade the range: in other words, traders can simply buy at support level, and sell at resistance level. A key advantage of this is that the FX market is range-bound a majority of the time, making it an attractive strategy for many market conditions.
The downside of range-bound trading, though, is twofold:
Range-bound trading generally does not yield substantial gains on a per-trade basis.
When the market breaks out of the range, it often will make big moves. As a result, traders using range-bound strategies can suffer large losses when the market breaks out of the range.
| The chart below illustrates the concept of range-bound trading. |
 |
