Consolidation


Consolidation of the price is when it goes sideways and makes no lasting move outside of a trading range.  Traders say the Pair is resting. While the Pair is resting it is important to not take any trades and wait until the price comes out of consolidation before taking a trade. Review the consolidation in the Pair below:



You can see the yellow area is clear consolidation. The prices are going sideways and confirmation of the consolidation has both the River (50 MA / 100 MA) and the Creek (5 MA / 12 MA) going sideways and the values right in the middle of the prices candles.
 
A big, out of the ordinary move, took the prices out of consolidation and it was easy to see they were headed south.  Be careful because out of the ordinary moves many times will have a snap back to the middle of the big move.   In this case the prices went south and continued.

Moves out of consolidation are often accompanied by River and Creek crosses.

Previous Topic : Moving Averages             Next Topic : Support & Resistance