Analysis Consolidation Chart Pattern in XAUUSD

To trade consolidation setups in traders need to learn about the technical analysis of consolidation pattern.

Consolidation Setup Patterns

Consolidation chart setups are chart patterns with converging trend-lines that form a price consolidation period.

The technical buy point from a consolidation chart pattern is the upside breakout of price

While a downside breakout of price is a technical sell signal.

Ideally, a market breaksout from a symmetric triangle prior to reaching apex of the triangle.

XAUUSD Trendlines can be drawn connecting the lows and highs of the consolidation setup, the trend-lines formed are symmetrical & converge together to form an apex.

A price breakout should occur somewhere between 60-80% into the consolidation chart pattern - triangle chart pattern. An early or late break out is more prone to fail, and therefore less reliable.

After a price break-out the apex forms support & resistance areas for the price. Price that has broken out of the triangle consolidation pattern should not retrace past the apex point. The apex of the consolidation pattern is used as a stop loss setting area for open trades.

When these consolidation chart pattern setups form we say that the market is taking a pause prior to deciding the next market trend direction to take.

These consolidation setups form when there a tug of war between buyers and the sellers and the market can't decide which way to proceed.

XAUUSD Trade a Consolidation Pattern? - Analysis Consolidation Chart Pattern in XAUUSD?

However, this consolidation pattern cannot go on forever and just like in a tug of war one side eventually wins, looking at the chart example displayed below see how the consolidation chart pattern eventually had a price break-out & moved in one direction.

XAUUSD Consolidation Chart Pattern Price Breakout Downwards - Sell Signal

XAUUSD Consolidation Chart Pattern Price Break-out Upwards