Sideways trend and how you can trade it in 2026

Updated October 23, 2026

Most people think they need to buy low and sell high to make money in the markets. Sound advice, harder to execute - especially with volatility where it has been lately. This guide covers the sideways trend and how you can trade it instead of guessing: how to recognise a range, where the breakout point sits, and how the same idea works in stocks and in crypto in 2026.

A better strategy for making money in stocks, particularly when the markets are sideways or trending downward, is to instead trade with the trend. This means buying stocks that are going up and selling those that are going down. It may seem counterintuitive, but it can be a very effective way to make money in the stock market.

In my experience as a trader, I remember the first time I tried this method. I was in college at the time, and I had just started trading stocks. My strategy was simple: buy when the stock was going up and sell when it went down. And it worked… for a while. But then I started losing money. A lot of money. Then I remembered:

“Yesterday’s home runs don’t win today’s games.” - Babe Ruth. The problem was that I was buying stocks that were already overvalued and selling those that were undervalued. I was buying high and selling low - the exact opposite of what I should have been doing.

Trading with the trend

It wasn't until later that I realised the importance of trading with the trend. By definition, a trend is a constant movement in a particular direction. On a chart it shows up as a sequence, not a single candle: higher highs and higher lows, or lower highs and lower lows, repeated often enough that direction stops being a coin flip.

In the stock market there are two basic types of trend: up-trends and down-trends. An up-trend is when the prices of a security or group of securities are consistently going up over time. A down-trend is, of course, when prices are falling. Both are tradable, because both hand you a direction. There is a third state and it is the awkward one: price goes nowhere.

So what is a sideways trend?

Sideways trends are when prices zigzag back and forth without any clear momentum. They occur when the forces of supply and demand are equal, so the price consolidates for a time before breaking into a new direction. Buyers who wanted in are in, sellers who wanted out are out, and neither side has a reason to push.

Sideways trends go by many different names. Some traders refer to them as “trading ranges.” Another name for a sideways trend is a “channel.” A channel is simply a range bound by two parallel trendlines. Finally, some traders refer to a sideways trend as a “horizontal trend” since the price action is horizontal or flat.

How to identify a sideways trend

Now that you know what a sideways trend is, how do you identify one? There are a few ways to identify a sideways trend:

So What Is a Sideways Trend?

Look for two parallel trend lines connecting the price action’s highs and lows.

Check whether there is a pattern in the series of higher highs and lower lows.

Also, look for a series of candlesticks with small bodies and long wicks.

Finally, look for a series of candlesticks with equal highs and lows.

Candlesticks, in particular, can be very helpful in identifying sideways trends. That’s because they provide a clear visual picture of the market’s supply and demand forces at work. The candlestick bodies represent the distance between the open and closed prices, while the wicks show the high and low prices.

When there is little difference between the open and close prices, there is limited buying or selling pressure in the market. This event is often seen during sideways trends, as buyers and sellers are evenly matched. Long wicks pointed either up or down, on the other hand, show that there is a lot of buying or selling pressure, but the pressure is not enough to create a breakout into a new trend.

Therefore, since the pressure on either side is insufficient, the price doesn’t necessarily move in and assumes a flat line. You can also identify a sideways trend based on the previous trend.

For example, if the market was continuously in an up-trend, you can expect the price to start consolidating sideways at new resistance and support levels. The same goes for a down-trend. If the market was in a downtrend, it could hit new support levels and start moving sideways.

Determining the breakout point in a sideways trend

Now you know what a sideways trend is and how to identify one. The next step is to determine where the breakout point is.

A breakout is when the price of a security or an asset moves outside of a defined trading range. This can be either up or down. For you to take a trade in the breakout direction, you need to know where the breakout point is. There are a few ways to do this:

The first way is to wait for a candlestick to close outside the trading range. This candlestick is called a “breakout candle.”

The second way is to use a technical indicator such as the Bollinger Bands. Bollinger Bands are two standard deviations away from the 20-period moving average.

The third way is to use a momentum indicator like the Relative Strength Index (RSI). The RSI measures the speed and change of price movements.

Using any of these methods will help you determine where the breakout point is.

How to trade a sideways trend

The best way to trade a sideways trend is to use a trend-following strategy. You buy when the price breaks above the upper trendline and sell when it breaks below the lower trendline. Size matters more here than in a clean trend, because false breaks are common: settle it with a position size calculator before you click, not after.

The logic behind this strategy is simple: when the price breaks out of a sideways trend, you’re buying at the beginning of a new uptrend. Conversely, when the price breaks below the lower trendline or support line, you’re selling at the beginning of a new down-trend.

Therefore, you stand a chance of making more profits if the price breaks into a bullish trend and cutting your losses in case of a bearish trend. Here’s an example of what I’m talking about:

(Image Courtesy of Tradingview)

As you can see from the chart above, the price of Google (GOOGL) was in a sideways trend for most of 2018. However, in early 2019, the price finally broke out above the upper trendline, signaling the start of a new uptrend.

If you had bought when the price broke out above the trendline, you would have made a nice profit as the stock continued to trend upwards. On the other hand, if you had sold when the price broke below support levels and started going down, you would have avoided a lot of pain as the stock dropped sharply.

Key takeaways

Trading with the trend, including the fresh trend that starts when a range gives way, is one of the best ways to make money in the stock market.

How to Trade a Sideways Trend?

When prices rise, buy stocks that are breaking out to new highs. When prices are falling, sell stocks that are breaking down to new lows. Inside a range, wait for a boundary to go first.

Courtesy of Tradingview

How to apply the sideways trend in the crypto market

The cryptocurrency market is much more volatile than the stock market or even FOREX. Prices can move up or down quickly, and a range that takes weeks to build on an equity chart can form and break inside one session, so you look for slight changes and react sooner.

The best way to do this is by using a trend-following strategy like the one I've described above. Guessing the middle of a crypto range is an expensive habit. Where you trade matters too, since spreads and execution vary widely between crypto brokers.

With this strategy, you would wait for the price to break out of a sideways trend before taking a position. For example, let us say the price of Bitcoin was in a sideways trend between $17,000 and $20,000. Before taking a position, you would wait for it to break out above or below this range.

Once the price breaks out of the range, you would buy or sell depending on the direction of the breakout. The difference between trading traditional assets and cryptocurrencies is that you can also trade both sides of the market with crypto. This means that if the price breaks out to the upside, you can buy Bitcoin; if it breaks out to the downside, you can short or sell it.

Putting numbers on a 17,000 to 20,000 dollar range

Take that Bitcoin range and price it out. The floor sits at $17,000 and the ceiling at $20,000, so the band is $3,000 wide, close to 18 percent of the lower boundary. Price closes above $20,000, you enter at $20,150, and the stop goes back inside the range under the old ceiling at $19,600. That is $550 of risk per coin.

Now size it. On a $5,000 account risking 2 percent you have $100 to lose, which allows roughly 0.18 BTC. Project the height of the range from the breakout and the first target lands near $23,000, about $2,850 a coin, or five times what you risked. Two failed attempts and one that runs still leaves you ahead.

That is the case for trading the edges instead of the middle: the loss is defined before you enter, because the range hands you both boundaries in advance.

Trading both sides of the market allows you to make money regardless of which direction prices are moving. Remember, however, that the market moves rapidly in the world of cryptocurrencies; you need to be able to act quickly when a trade signal appears.

Success stories using the sideways trend strategy

I have been trading stocks, Forex and crypto for some time. Back in 2017, when Bitcoin was trending upwards, many traders I know made a lot of money by simply waiting for a range to break and following it. Their edge was patience, not analysis.

Success Stories Using the Sideways Trend Strategy

While a sideways trend in traditional markets may last for weeks or even months, a sideways movement in the crypto market can last for days or even hours. One of my friends made over $100,000 in a single day by shorting Bitcoin when it broke below $15,000, then repurchasing it when it broke just slightly above $11,000.

Using the sideways trend strategy, he could make a massive profit in a very short period. Another friend of mine made over $50,000 in just a few hours by buying Ethereum when it broke out above the $250 resistance level and selling when it reached $850.

Again, using the sideways trend strategy allowed these guys to profit significantly in just a few days. If you want to be successful in trading, you need to have a strategy that you can follow consistently. The sideways trend strategy is one of the best ways to make money regardless of whether prices are going up or down.

The bottom line

A sideways trend isn't dead time, it is the market drawing its own boundaries for you. Mark the two lines, wait for a close outside them, size the trade first, and accept that a share of breakouts will fail.

Practise where a failed breakout costs nothing and keep a record of every range you trade: boundaries, entry, stop, outcome. Twenty entries in, your own recurring mistake will be impossible to miss. Before trading it live, compare spreads, execution speed and minimum deposits across regulated brokers, because slippage takes a bigger bite out of a breakout than most people expect.

FAQ

What is a sideways trend?

A stretch of price action with no clear direction, where supply and demand are balanced. Highs stop climbing, lows stop falling, and price moves between two roughly parallel levels until one of them gives way.

How does trading a sideways trend work in 2026?

The mechanics are unchanged: mark the ceiling and floor of the range, wait for a candle to close outside one of them, then trade that direction with a stop back inside the range.

What are the common mistakes?

Buying in the middle of the range, entering on an intraday spike instead of a close, and sizing a breakout as if it were certain. False breaks are normal, so the loss has to be small and decided in advance.

Is it suitable for beginners?

More than most strategies, because both boundaries are visible upfront and the stop is obvious. Start on a demo account, trade one instrument, and log every entry until your win rate is a real number.