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Mean reversion
How does a range trade show that the market is still a range?
Range fade
What it bets
Both boundaries have already been respected, so price that touches a boundary comes back instead of going through.
How the rule is written
Write the range down first: at least two similar highs and two similar lows. Buy near the lower edge and sell near the upper edge, with the stop outside the boundary. Once a close stays outside the boundary, the range is negated, and the old reversion trade has to end.
When it fails
A boundary drawn after a single test. The first break is often the end of the range, while the fade is still waiting at the boundary for a return.
Do not confuse it with
A grid does not ask you to prove the boundaries. It lays the orders out in advance. The boundaries of Bollinger reversion move every day with standard deviation. The boundaries of a range trade are structure. Once they break, they no longer count.