Intraday range trading is a straightforward yet highly effective strategy that focuses on buying near support and selling near resistance within a well-defined daily range. It works best in sideways markets when price oscillates between clear boundaries rather than trending strongly.

In this article, we explain how intraday range trading works and how to apply it successfully across different markets.

What is Intraday Range Trading?

Intraday range trading involves:

• Identifying key support and resistance levels.
• Buying near support and selling near resistance.
• Avoiding breakouts and focusing on mean reversion.

It is especially effective during low-volatility periods or ahead of major news releases when markets are consolidating.

Why the Intraday Range Trading Strategy Works

• Clear Boundaries: Makes entries and exits predictable.
• Low Risk, High Reward: Tight stops with high reward-to-risk potential.
• Works in Low Volatility Conditions: Ideal when markets lack strong directional moves.

How to Set Up the Intraday Range Trading Strategy

Here’s how to prepare:

1. Use a 5-minute, 15-minute, or 30-minute chart to spot the daily range.
2. Identify major support and resistance based on recent highs and lows.
3. Look for at least two touches on both the support and resistance levels for confirmation.

Focus on highly liquid markets like EUR/USD, GBP/USD, gold, and S&P 500.

How to Trade the Intraday Range Trading Strategy

Here’s a structured approach:

1. Identify the Range

• Draw horizontal lines at the major intraday support and resistance zones.
• Confirm that price is oscillating between these two levels without breaking out.

Pro Tip: A tight, well-respected range increases the chance of success.

2. Entry Strategy

• Buy Setup:
  • Wait for price to approach the support zone.
  • Look for bullish reversal candlestick patterns (e.g., hammer, bullish engulfing).
  • Enter long after confirmation.
• Sell Setup:
  • Wait for price to approach the resistance zone.
  • Look for bearish reversal candlestick patterns (e.g., shooting star, bearish engulfing).
  • Enter short after confirmation.

Volume and momentum indicators like RSI can also confirm oversold (buy) or overbought (sell) conditions.

3. Stop-loss Placement

• For long trades, place the stop-loss just below the support zone.
• For short trades, place the stop-loss just above the resistance zone.

Tight stops protect your capital if the range fails and a breakout occurs.

4. Profit Target

• Target the opposite side of the range:
  • For longs, exit near resistance.
  • For shorts, exit near support.

Alternatively, exit when price reaches 80% of the distance between the two levels to lock in gains safely.

5. Risk Management

• Risk only 0.5% to 1% of your account per trade.
• Only trade setups where the range is well-defined and price shows clear reversal patterns at the boundaries.

Best Practices for Intraday Range Trading

• Avoid Choppy Markets: Make sure the range is clear and clean without messy, random price action.
• Wait for Confirmation: Don’t anticipate reversals — wait for the setup to complete.
• Monitor Volume: Decreasing volume near the middle of the range is normal; increasing volume near boundaries may hint at a breakout.

When to Avoid Range Trading

• During major news releases (e.g., NFP, FOMC) when breakouts are more likely.
• In strong trending markets where price does not respect previous support/resistance levels.

Common Mistakes to Avoid

• Trading Inside the Range Without Boundaries: Always wait for price to touch the edges.
• Chasing Breakouts: Stick to range trades unless the range clearly breaks and retests.
• Ignoring Risk Management: Tight stop-losses are essential because ranges can break suddenly.

Advantages of the Intraday Range Trading Strategy

• Simple and Effective: Easy to spot and execute.
• Excellent Risk-to-Reward Ratio: Defined entries, stops, and targets.
• Works Across Markets: Forex, stocks, commodities, and indices.

Conclusion

Intraday range trading offers traders a calm, structured way to profit from sideways markets. By identifying strong support and resistance levels, waiting for reversal confirmation, and managing risk tightly, traders can consistently capture profitable moves without needing major market momentum.

To master professional techniques like intraday range trading and build a complete trading plan, explore our expert Trading Courses designed to help you trade smarter, faster, and more successfully.