How Do You Trade a Consolidation Pattern? - Technical Analysis Consolidation Chart Pattern

To trade consolidation chart patterns in forex traders need to learn about the technical analysis of consolidation chart pattern.

Consolidation Trading Patterns

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

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

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

Ideally, a market breaks-out from a symmetrical triangle prior to reaching apex of the triangle.

Forex Trend-lines can be drawn connecting the lows & highs of the consolidation phase, the trend lines formed are symmetric and converge to form an apex.

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

After a price breakout the apex forms support and resistance levels for the price. Price that has broken out of the apex should not retrace past the apex. The apex of the consolidation chart pattern is used as a stop loss setting area for open Forex trades.

When these consolidation patterns form we say that the forex market is taking a pause before deciding next direction to take.

These consolidation chart patterns form when there is a tug of war between the buyers & sellers and the forex market can't decide which way to continue.

How Do You Trade a Consolidation Pattern? - Technical Analysis Consolidation Chart Pattern?

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

Forex Consolidation Chart Pattern Price Breakout Downwards - Sell Forex Signal

Forex Consolidation Chart Pattern Price Breakout Upwards - Buy Forex Signal