Consolidation

 

Definition: A term used in technical analysis to identify a period of market indecision. During a consolidation period strict support and resistance levels bind prices. Volume is often seen to subside, as does momentum.

 

 

Additional Info: Consolidations can and do occur on all time frames. Momentum traders often view consolidations as opportunities for future potential trades. The momentum breakout of a consolidation can be very profitable as participants enter the market hoping to benefit from the resumption of or beginning of a new trend.

Related Terms: Volume - Momentum - Support - Resistance - Breakout - Trend

 

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