When stock costs begin to move inside a certain range, falling to established lows and then springing back up to established highs and fall back again, the stocks are alleged to be in a consolidation or clogged phase.
Most of the time, characteristic consolidation patterns can be seen, with the commonest one being the rectangle pattern or on occasion called a price "corridor" or channel.
When costs start to drop, traders get scared and feeble holders will sell their stocks so that they will fall to a support level which other traders will consider a good price to buy. From that level, stock prices will then rebound, frequently with volume as support comes into the stock.
As the cost of the stock improves and increases, it will reach a peak where traders who've acquired the stock at lower costs will sell. At the exact same time, feeble holders who have acquired the stock at higher prices may need to bail out as their losses are narrowed with the improved costs. At that point in time, resistance is faced and the stock price then tops over to form a top.
When you connect the support prices and the peak costs where the price tops over, you will find the pattern of a channel or a rectangle.
During consolidation phases, prices trade inside a range formed by the base of the channel or rectangle and the apex of the rectangle or channel.
Technically, the utilising of oscillators will be acceptable for trading within congestion phases. The key's to identify the bottom of the channel and to buy nearer to the bottom of the channel and to sell as prices reaches the head of the channel or rectangle.
A common mistake more modern trader's commit is to continue to use their trend following trading program during a choked phase and encounter lots of whipsaws as prices oscillate between little ranges.
When you transit from a bullish market and moves into a bearish market, be happy with smaller gains which come from trading the clogged and consolidation phases. Fall back upon oscillators to track your stock prices and trade them re their location in the price rectangle pattern that you can simply identify in your stock chart.
Most of the time, characteristic consolidation patterns can be seen, with the commonest one being the rectangle pattern or on occasion called a price "corridor" or channel.
When costs start to drop, traders get scared and feeble holders will sell their stocks so that they will fall to a support level which other traders will consider a good price to buy. From that level, stock prices will then rebound, frequently with volume as support comes into the stock.
As the cost of the stock improves and increases, it will reach a peak where traders who've acquired the stock at lower costs will sell. At the exact same time, feeble holders who have acquired the stock at higher prices may need to bail out as their losses are narrowed with the improved costs. At that point in time, resistance is faced and the stock price then tops over to form a top.
When you connect the support prices and the peak costs where the price tops over, you will find the pattern of a channel or a rectangle.
During consolidation phases, prices trade inside a range formed by the base of the channel or rectangle and the apex of the rectangle or channel.
Technically, the utilising of oscillators will be acceptable for trading within congestion phases. The key's to identify the bottom of the channel and to buy nearer to the bottom of the channel and to sell as prices reaches the head of the channel or rectangle.
A common mistake more modern trader's commit is to continue to use their trend following trading program during a choked phase and encounter lots of whipsaws as prices oscillate between little ranges.
When you transit from a bullish market and moves into a bearish market, be happy with smaller gains which come from trading the clogged and consolidation phases. Fall back upon oscillators to track your stock prices and trade them re their location in the price rectangle pattern that you can simply identify in your stock chart.
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