Consolidation Oil Trading Patterns

With consolidation oil trading patterns the crude oil market can move in any direction after a oil price break-out. Consolidation crude oil patterns are used to identify break-out patterns in oil charts. There are two different types of consolidation crude oil chart patterns that form on crude oil charts:

• Symmetric Triangles - Consolidation Oil Trading Chart Patterns
• Rectangles - Range Oil Trading Chart Patterns

Consolidation Oil Trading Patterns

Symmetrical triangles are crude oil patterns with converging trendlines that form a oil price consolidation period that signals there is going to be a oil price breakout in one direction after this crude oil chart pattern breaks out in one direction. The buy oil signal from a symmetrical triangle is the upside crude oil price break, while a downside crude oil price break is a sell oil signal. Ideally, a the crude oil price breaks out from a consolidation crude oil chart pattern prior to reaching the apex of the triangle.

Oil Trading Trend lines oil trend lines can be drawn connecting the lows and highs of the consolidation pattern for the oil price, the trend lines formed are symmetric and converge to form an apex - symmetric triangle pattern. A crude oil price break-out should occur somewhere between 60% - 80% into the triangle consolidation crude oil pattern. An early or late oil breakout is more prone to oil whipsaws, and therefore less reliable. After a oil price breakout to one side the apex of the symmetric triangle forms the support and resistance levels for the oil price. Oil Trading price that has broken out of the consolidation crude oil chart pattern should not retrace past the apex. The apex is used as a stop-loss setting level for open crude oil trades placed after a oil price breakout.

When oil consolidation patterns form we say that the oil market is taking a pause before deciding the next direction to take - this also signals an impending crude oil price breakout - How to Trade Breakouts In Crude Oil Trading - How to Identify Crude Oil Trading Break-out Pattern - Breakout Strategy Oil Trading.

These oil consolidation patterns form when there is a tug of war between buyers & sellers & oil market can't decide which way to move.

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However, this consolidation crude oil chart pattern cannot go on forever and just like in a tug of war one side eventually wins, the crude oil chart examples below shows how the consolidation crude oil chart pattern eventually had a oil price breakout and moved in one direction.

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After crude oil price consolidating, If crude oil price breaks-out the upper line we open buy oil trades, if crude oil price breaks-out the lower line we open sell crude oil trades.

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A rectangle consolidation crude oil pattern is a trading range with narrow crude oil price action which forms a consolidation period in crude oil market. The oil trading range is defined by two parallel oil trend lines which are horizontal and these indicate the presence of support and resistance levels at this particular area. Rectangle consolidation crude oil chart pattern is drawn on a crude oil chart using a rectangle, therefore the name oil rectangle crude oil trading chart pattern.

For this oil consolidation crude oil chart pattern, crude oil price forms a series of highs and lows that can be connected with horizontal oil trend lines which are parallel to each other. Rectangle consolidation crude oil chart pattern forms over an extended period of time giving this oil pattern its rectangle shape.

A oil breakout of crude oil price action from this rectangle consolidation crude oil chart pattern occurs when either of the horizontal line is penetrated & the oil trading range of this rectangle oil pattern is broken. An upside crude oil price breakout is a buy oil signal. A downside crude oil price break out is a sell oil trade signal.

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Oil Trading Price Breaks Out of the rectangle consolidation range after a period of time & crude oil price continues to move upwards after an upward crude oil price breakout.

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