What is a consolidation pattern?

Although a consolidation pattern results from market indecision it ends up with market consensus. A consolidation pattern may be superimposed on upward market trends. This kind of pattern can also be a prelude to market reversal. Knowing Candlestick analysis helps the trader anticipate just where the apparent market indecision is going to lead.

What is consolidation in technical analysis?

Consolidation in technical analysis refers to an asset oscillating between a well-defined pattern of trading levels. Consolidation is generally interpreted as market indecisiveness, which ends when the asset's price moves above or below the trading pattern.

How do you know if a stock is under consolidation?

An important step in trading consolidation patterns involves assessing how long the pattern has held. Trading on narrowly consolidated stocks can happen but there is often less room for profit due to the small range. You can identify a stock that is under consolidation by watching for three simultaneously occurring properties on a price chart.

What is a period of consolidation?

Periods of consolidation can be found in price charts for any time interval, and these periods can last for days, weeks, or months. Technical traders look for support and resistance levels in price charts and then use these levels to make buy and sell decisions.