What does consolidation mean? In simple explanation of consolidation

Stock consolidation refers to the price fluctuating up and down within a certain range, without obvious trend. The reasons for consolidation include: balance of strength, lack of news, and wait-and-see. The consolidation types are divided into narrow width, wide width, flag shape, and triangle shape. The duration varies depending on the change of factors. The trend after consolidation depends on type and time: narrow breakthrough, wide vibration, flag shape follows the direction of the trend line, and triangle breaks upward or downward.

Precise explanation of consolidation

Consolidation refers to the stock price fluctuating up and down within a certain range, without a clear upward or downward trend. a market state.

Reasons for consolidationConsolidation usually occurs in the following situations:

The power balance between the buyer and the seller makes the price unable to break through the resistance level. or support level.

• The market lacks new positive or negative news, which has led to traders waiting and watching.
• Investors are waiting for the clear direction of the market and are unwilling to enter or leave too early.

Types of consolidation

Consolidation can be divided into the following types:

Narrow-wide consolidation: 🎜>The price fluctuation range is small, and the upper and lower fluctuation range is narrow.

• Wide-wide consolidation: Price fluctuations are large, and the upper and lower fluctuations are wide.
• Flag shape consolidation: Price fluctuates up and down between two parallel trend lines to form a flag shape.
• Triangle consolidation: Price fluctuates up and down between two converging trend lines to form a triangle.

Duration of consolidation

Consolidation may last for days, weeks or even several moon. Its duration depends on whether the factors causing the consolidation are resolved.

Trend after consolidation

Trend after consolidation usually depends on the type and duration of consolidation:

Narrow range Consolidation:

usually indicates that the market is about to break through, up or down.

Wide consolidation:
• may indicate that the market will continue to fluctuate for a period of time and eventually break through or turn to the trend.
Flag Consolidation:
• usually indicates that the price will break through in the direction of the flag trend line.
Triangle Consolidation:
• may indicate that the price will break upward or downward depending on the direction of the convergence of the triangle type.
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