Trading sideways markets

A parallel channel can also be drawn horizontally to define a sideways market or trading range. In this case, the upper and lower boundaries serve as clear resistance and support levels.

Trading bounces involves using these boundaries as potential entry and exit points. When the price approaches the lower support line, a trader may look to trade in the direction of the possible uptrend, anticipating a bounce up towards the upper resistance line.

Conversely, when the price reaches the upper resistance line, traders may look to trade in the direction of the possible downtrend, expecting a correction towards the lower support line.