Stock consolidation is a term that is used to refer to astock that is neither going up or down or if it is, it’s only going up slightly to return to where it was before and vice versa. This is also called trading within a range.
How do you know if a stock has a consolidation pattern?
Whenever a stock shows a consolidation pattern, one needs to wait for the breakout. Indicators like volumes and technical instruments like RSI and MACD assist in the confirmation of a firm breakout. Consolidation is a phase when a stock or an index trades within a range. The trend is said to be sideways and may vary depending on the circumstance.
What is a consolidation period?
Consolidated stocks typically trade within limited price ranges and offer relatively few trading opportunities until another pattern emerges. Technical analysts and traders regard consolidation periods as indecisive and cautious. 1 Stocks under consolidation trade in a limited range.
Why are you trading consolidations?
The reason you are trading consolidations is because you aretrying to make a profit. One thing you can do to maximize your profit is look for stocks that are experiencing a consolidation, but are showing an uptick in trading volume.
