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A box range, also called a rectangle or trading range, is a sideways pattern where price moves horizontally between a clear support level at the bottom and a resistance level at the top. It reflects a balance between buyers and sellers, with neither able to push price beyond the boundaries. The pattern can act as a continuation or reversal depending on which side price eventually breaks. It is confirmed once price closes outside the box.

Two main approaches exist. Range traders buy near support and sell near resistance, expecting price to bounce within the box, placing stops just outside the boundary. Breakout traders instead wait for a decisive close beyond support or resistance and trade in that direction, targeting the box height projected from the breakout. Both require discipline because ranges can persist or produce false breaks, and trading them as CFDs carries risk.

Look for price touching a horizontal resistance level at least twice and a horizontal support level at least twice, with movement bouncing between the two like a channel with flat top and bottom. The highs should align roughly evenly, as should the lows. The more times price respects both boundaries, the more valid the range. Volume often stays subdued inside the box and picks up on a breakout.

A common approach is the measured move: measure the height of the box from support to resistance and project the same distance from the breakout level in the direction of the move. For example, after an upside breakout, the box height can be added to the resistance level to estimate a potential target. Traders may also place a stop-loss back inside the range if the breakout fails and price moves back into the box. As with any breakout strategy, the measured move is an estimate rather than a guaranteed price target, and risk management is important when trading CFDs.

A box range is neutral while it lasts because price is simply oscillating between support and resistance. Bias only appears at the breakout: a close above resistance is bullish, and a close below support is bearish. Ranges frequently form as continuation pauses within a larger trend, so the breakout often resolves in the trend’s direction. Until price breaks out, no directional conclusion should be drawn.

A frequent mistake is treating a range as a breakout too soon, entering on a minor push past support or resistance that quickly reverses back inside the box. Another is fighting a strong trend by fading every boundary. Traders also forget that ranges eventually end, so risking too much on repeated bounces can hurt. Waiting for confirmed closes and using stops just beyond the boundary helps manage these risks.