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What Happens after a Consolidation Chart Setup?

A consolidation pattern is a neutral chart setup indicating that market prices are temporarily stalled as buyers and sellers struggle for control. This tug-of-war demonstrates indecision, with neither side managing to dominate market movements.

This period of consolidation may persist until one side of the market ultimately prevails, leading to the inception of a fresh trend aligned with the direction of the market price breakout from the consolidation zone.

An upward breakout indicates that the market trend is viewed as bullish.

If the price breaks downward, the trend is considered bearish.

Once the price breaks out of consolidation, traders are then in a position to commit to a trade on the side of the break, rather than attempting to enter prior to the breakout.

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