The range, a common measure of dispersion, is the difference between the highest and the lowest values in a set of observations. A larger range indicates a greater amount of dispersion, all else equal. The range focuses on the extremes rather than the middle.
Range = MAX - MIN
Alternatively, the range can be described as the interval — the highest and the lowest values.
This alternative definition allows the stock traders to replace the maximum value with the resistance level and the minimum value with the support level as both are useful in pinpointing entry/exit points for trades. When a stock price breaks below the support level, it is considered to be a bearish signal and a breakout above the resistance is considered to be a bullish signal.
The range is easy to compute and that is its advantage over the other measures of dispersion. A disadvantage is that the range cannot describe the shape of distribution because it involves only two observations from the distribution.
Because the range is the difference between the maximum and minimum returns, it can reflect extremely large or small outcomes that may not be representative of the distribution.