Consolidation

Dictionary Says

Definition of 'Consolidation'

In technical analysis, the movement of an asset's price within a well-defined pattern or barrier of trading levels. Consolidation is generally regarded as a period of indecision, which ends when the price of the asset breaks beyond the restrictive barriers. Periods of consolidation can be found in charts covering any time interval (i.e. hours, days, etc.), and these periods can last for minutes, days, months or even years. Lengthy periods of consolidation are often known as a base.
Investopedia Says

Investopedia explains 'Consolidation'

The levels of resistance and support within the consolidation are created through the upper and lower bounds of the stock's price. Once the price of the asset breaks through the identified areas of support or resistance, volatility quickly increases and so does the opportunity for short-term traders to generate a profit.

Related Definitions

  • Chartist

    Another name for a technical analyst. This is a person who uses charts to identify patterns that can suggest future activity.
    Read More »
  • Distribution

    1. When trading volume is higher than that of the previous day without any price appreciation. 2. The removal of assets from a retirement account. The assets are then paid to the ...
    Read More »
  • Resistance (Resistance Level)

    The price at which a stock or market can trade, but not exceed, for a certain period of time. Often referred to as "resistance level".
    Read More »
    • Support (Support Level)

      The price level which, historically, a stock has had difficulty falling below. It is thought of as the level at which a lot of buyers tend to enter the stock. Often referred to as the ...
      Read More »
    • Technical Analysis

      A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's ...
      Read More »
    • Rectangle

      A pattern formed on a chart where the price of a security is trading within a bounded range in which the levels of resistance and support are parallel to each other, resembling the shape ...
      Read More »
    • Volatility

      1. A statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured by using the standard deviation or variance between returns ...
      Read More »
    • Day Trader

      A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. Most trades are entered and closed out within the same day.
      Read More »
    • Symmetrical Triangle

      A chart pattern used in technical analysis that is easily recognized by the distinct shape created by two converging trendlines. The pattern is identified by drawing two trendlines that ...
      Read More »
    • Sideways Trend

      Describes the horizontal price movement that occurs when the forces of supply and demand are nearly equal. A sideways trend is often regarded as a period of consolidation before the ...
      Read More »

Articles Of Interest

Partner Links