Trade Stock Indices

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Bilateral/Consolidation Stock Indices Chart Patterns Indices Trading

With bilateral/consolidation stock indices chart patterns the stock indices trading market can move in any direction. There are two types of consolidation stock indices chart patterns that form on indices charts:

  • Symmetric Triangles - Consolidation stock indices chart patterns
  • Rectangles - Range/ranging market

Consolidation Indices Chart Patterns

Symmetrical triangles are stock indices chart patterns with converging indices trend lines that form a consolidation period. The technical buy point from a symmetrical triangle is the upside break, while a downside break is a technical sell indices signal. Ideally, a market breaks out from a symmetrical triangle prior to reaching the apex of the triangle.

Indices Trend lines can be drawn connecting the lows and highs of the consolidation phase, the indices trend lines formed are symmetric and converge to form an apex. A breakout should occur somewhere between 60-80% into the triangle stock indices chart pattern. An early or late breakout is more prone to failure, and therefore less reliable. After a indices price breakout the apex forms support and resistance levels for the indices price. Indices Price that has broken out of the apex should not retrace past the apex. The apex is used as a stop loss setting area for the open Indices trades.

When these consolidation patterns form we say that the stock indices trading market is taking a break before deciding the next direction to take.

These consolidation patterns form when there is a tug of war between the buyers and the sellers and the stock indices trading market cannot decide which way to move.

Bilateral Consolidation Indices Chart Pattern on Indices Chart - Consolidation Index Chart Trading Patterns and Symmetrical Triangles Index Chart Pattern - Rectangle Trading Setups Stock Index Trading

Consolidation Indices Chart Pattern

However, this pattern cannot go on forever and just like in a tug of war one side eventually wins, looking at the stock indices chart below see how the consolidation eventually had a breakout and moved in one direction. Now how do we make sure we are on the winning side?

Downward Indices Price Action Breakout After Consolidation - Consolidation Index Chart Setups and Symmetrical Triangles Index Chart Pattern

Breakout Downwards Sell Indices Trading Signal after a Consolidation

Indices Price Action Upward Breakout After Consolidation - Consolidation Index Chart Trading Setups and Symmetrical Triangles Index Chart Pattern - Rectangle Trading Setups Indices Trading

Breakout Upwards Buy Indices Trading Signal after a Consolidation

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Now back to our question, how do we make sure we are on the winning side?

Well we wait until stock indices price moves past one of the lines and put buy or sell orders in that direction. After consolidating, If stock indices price breaks the upper line we buy, if it breaks the lower line we sell.

Alternatively if you do not want to wait out the consolidation, you can use pending stock indices orders. If you would like to know more about pending indices orders go to the topic: Stop Entry Indices Order Types

The two types of stop order types used to trade consolidation stock indices chart patterns are:

  • Buy Entry Stop An order to buy at a level above the stock indices trading market indices price.
  • Sell Entry Stop An order to sell at a level below the stock indices trading market indices price.

These are stock indices orders to buy above the stock indices trading market or to sell below the stock indices trading market.

Rectangle Indices Chart Pattern

A rectangle consolidation pattern is a trading range with narrow stock indices price action that forms a consolidation phase in stock indices market. The trading range is defined by two parallel indices trend lines which are horizontal and indicate the presence of support and resistance. This indices pattern is drawn on a stock indices chart using a rectangle, therefore its name rectangle stock indices chart pattern.

For this consolidation stock indices chart pattern, stock indices price forms multiple highs and lows that can be connected with horizontal indices trend lines that are parallel to each other. This indices pattern forms over an extended period of time giving the pattern its rectangle shape.

A breakout of stock indices price action from this consolidation pattern occurs when either of the horizontal line is penetrated and the trading range of this rectangle is broken. An upside breakout is a buy indices signal. A downside breakout is a sell indices signal.

Rectangle Indices Chart Pattern Breakout - Consolidation Stock Index Chart Trading Setups and Symmetrical Triangles Stock Index Chart Setup - Rectangle Patterns Stock Index Trading

Rectangle Pattern Stock Indices - Consolidation Pattern

Indices Price Breaks the consolidation range after sometime and continues to move upwards after an upwards market breakout.

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