Consolidation Byrons
after a big press move either to the upside or the downside price will tend to stabilize around a certain
level.
The average price of that particular equity will still fluctuate between highs and lows but the trading
range will be much smaller compared to the previous trading periods.
Trading periods characterized by smaller trading range.
Following a big price move are called consolidations consolidation periods are very important for traders
because they are providing the opportunity to carefully analyze the market and gradually position themselves
before price makes a big move.
Consolidations are periods of rest in price action where there is some sort of equilibrium between the
Bulls and the Bears consolidations also indicating the season and that can last anywhere between one
day to several days weeks or even months.
Consolidation areas are preludes to substantial price movements breaking out of prison support resistance
burial formations and the consolidation at some point other the Bulls or the Bears are going to gain
control over press action when that happens.
Price is going to break out of the consolidation area price will move up if the Bulls can control price
will move down if the Bears take charge of it.
Generally when the consolidation is over price will resume its previous trend.
If price was trending up prior to the consolidation once price break south of the consolidation area
it will continue its upward movement.
On the other hand if price was trending down prior to the consolidation once it breaks out of the consolidation
area it will continue its downward movement.
The most commonly utilized consolidation patterns are triangle's where just flags and pennants within
each pattern that are bullish and bearish configurations.
For example the bull flag and the folding wedge or consolidation with the potential of a bullish breakout
pattern barflies and rising wages are consolidation patterns with the potential of bearish breakup patterns
often times bearish breakouts are referred to as break down and bullish breakouts are referred to as
just breakouts.
In this course we are going to use the term baddish breakout and bullish breakout.