How to Interpret a Consolidation Chart Pattern
Trade a Consolidation Pattern
Consolidation patterns - to trade consolidation chart patterns traders need to learn about consolidation pattern trading analysis.
How to Trade a Consolidation Pattern
Consolidation chart patterns are chart patterns with converging trend-lines that form a price consolidation phase.
A buy signal from a consolidation chart pattern is the upside price breakout
A sell signal from a consolidation pattern is the downside price break out.
Ideally, the price breaks out from the consolidation chart pattern prior to reaching the apex of this consolidation chart pattern which looks like a triangle.
Trend lines can be drawn connecting the price lows and stock price highs of the consolidation phase of the market price, the trendlines formed are symmetric & converge to form an apex - this setup resembles a triangle.
After a price breakout from the consolidation pattern - the apex forms support and resistance areas for the market price. Price that has broken out of the apex of the consolidation pattern shouldn't retrace past the apex. The apex of the consolidation chart pattern is used as a stoploss order trading order setting area for the open stock trades.
When consolidation chart patterns -traders say that the market is taking a break prior to deciding next direction to take.
Consolidation chart patterns form when there a tug of war between the buyers & the sellers and the market cannot decide which direction to move.
How to Interpret Consolidation Pattern?
However, when this consolidation pattern forms it cannot go on forever & eventually the price will breakout to one side - from the chart examples below the consolidation chart pattern eventually had a price breakout and moved in one direction.
How to Interpret Consolidation Pattern?
How to Trade a Consolidation Pattern?
How to Analyze a Consolidation Chart Pattern
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