Simple's Green Room

[pennies2007]

Hey Qui. The idea behind a consolidation zone is that there needs to be at least 15 candles confined pretty much within the zone. The ideal time frame is the 15 minute to look for those zones but they can occur on any time frame.

A breakout of the zone is only confirmed by at least 2 candle closes above or below the zone. The typical target is a total move above or below the zone based on the zone width. Most zones work better if they're in the 30 to 50 pip range. So a break above the zone would give us a measured move of at least 30 to 50 pips above the zone breakout, give or take.

It's basically a block trading method. If a block measures 30 pips, for example, and price manages to closed above the block, then we can expect a 30 pip move above the block after the retrace is over.

One other note of interest about consolidation zones...when price action eventually returns to an area of a previous CZ, it will tend to look at the zone as support or resistance, depending on which direction it's coming from, even days or weeks later.