Consolidation

What is Consolidation?

Consolidation is a period where price moves sideways within a defined range. It represents a balance between buyers and sellers, a pause in the trend where the market "rests" before the next move.

Why consolidation matters

• Energy builds: the longer the consolidation, the bigger the eventual breakout
• Direction clue: consolidation after an uptrend usually resolves upward (and vice versa)
• Entry opportunity: buy near support of the range with a tight stop

Common consolidation patterns

• Flat top / flat bottom: horizontal support and resistance
• Triangle: converging trendlines (ascending, descending, or symmetrical)
• Wedge: narrowing range with both lines sloping the same direction