Range Bound Trading

Definition ∞ Range bound trading describes a market condition where an asset’s price fluctuates within a defined upper and lower boundary for an extended period. During this phase, the price repeatedly tests resistance at the top of the range and support at the bottom, without breaking out decisively in either direction. This pattern indicates a temporary balance between buying and selling pressure. It is often seen as a period of consolidation.
Context ∞ The state of range bound trading in digital asset markets is a common occurrence, providing opportunities for specific trading strategies but also signaling market indecision. Discussions often center on identifying the strength of the support and resistance levels and predicting a potential breakout. A critical future development involves monitoring for fundamental news or technical indicators that could cause the price to exit this range. This pattern offers valuable insight into current market structure.