Consolidation Chart Patterns

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

• Symmetric Triangles - Consolidation Chart Patterns
• Rectangles - Range Stock Chart Patterns

Symmetrical Triangles Stocks Trading Pattern

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

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

When stocks trading consolidation patterns form we say that the stock trading market is taking a pause before deciding the next direction to take - this also signals an impending stocks price breakout - How to Trade Breakouts in Stocks Trading - How to Identify Stock Break-out Pattern - Breakout Strategy Stocks.

These stocks trading consolidation patterns form when there is a tug of war between buyers and sellers and the stock trading market can't decide which way to move.

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

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

Rectangle Trading Pattern

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

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

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

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Stocks Price Breaks Out of the rectangle consolidation range after a period of time & price continues to move upwards after an upward stocks price breakout.

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