Consolidation is simply another description of a trading range and the complete absence of a trend. These periods can make for frustrating trading if you are looking for a large price move, as price remains range-bound within a consolidation area. Consolidations often follow uptrends or downtrends, and are a representation of a stable market which lacks emotion ahead of the next significant move in prices. Consolidations are healthy in stocks which have just made large price moves, and help to alleviate the overbought or oversold readings of indicators.
Consolidations are found in chart patterns like a channeling stock or rectangle pattern.
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