An consists of a strong .
Strong levels are usually pretty obvious.
There will be lots of wicks and bodies that touch a horizontal .
A is not just a line but it is always a zone.
So you can expect the price to push through the level sometimes.
Other times price will just approach the level.
Draw the line with the intent of finding the price where the activity seems to be most prominent.
Draw it so there are no candle bodies above the line so the line can be used as a trigger price.
A close above the line will be a trade trigger.
Just like all ines this line is very subjective.
You won't get it exactly right every single time.
You can adjust this line if a head fake happens and price falls back inside the triangle.
A far less important line but an important indicator of what is happening in this marketis the ascending portion of the triangle.
This shows us that fewer and fewer traders are willing to see the price drop lower.
Everytime the price is pushed down it gets pushed back up more quickly.
Price gets trapped between these two lines and the pressure to break the gets stronger and stronger until it finallys breaks.
If price pushes below this uptrend line then redraw it as long as the price goes back into the triangle.
Watch that the continues to decline also.
Watch that a triangle will break usually when price reaches 2/3 to ¾ of completion.
Price could break sooner.
As a confirmation of the consolidation pattern watch for a decline in and ATR/volatility.
This represents boredom on the part of traders.
Fewer traders are willing to participate in the consolidation and are sitting around waiting for it to break.
Use the built-in Trading View indicator.
Click on indicators- select built-ins – scroll down until you see – click on it.
The will appear in the same window pain as the price action.
To seperate it from the price action right-click on the indicator- select “move to” to “ new pane below”.
This will seperate the frpom the price action pain.
Select the default MA of 20 periods.
Use the indicator with a moving average because we need to know what the average is. Right click indicator – select style – click MA.
20 periods is roughly 4 weeks of data for most markets.
is trader speak for how much the price is moving around.
For use the (atr) which is the average of the lengths of the last number of candles.
Use the default of 14 periods for the Trading View indicator.
This is a short er time period for the ATR so to bet a little quicker idea of what the volatilityis doing.
14 periods represent roughly 3 weeks of data for most markets.
There are always anomalies, news events and a data release that is messing with these patterns.
A brief hiccup in a pattern does not necessarily negate the pattern if the price falls back into the pattern after these events.
Trade the only with a breakout of the .
Enter a buy trade on a breakout candle close of the on your timeframe.
Our upper triangle has no candle closes above it os a close above that level is significant.
What if it is a false breakout or head fake?
Look for on the breakout and just go with it. If there is a cnadle close back inside the consolidation triangle then close the trade for a loss and move on the keep the loss small.
How to move on depends on what the chart does for the next few bars.
If price settles back into the original triangle with the exception of the head-fake and the & ATR/volatility continue to decline, then redraw the to above the candle bodies on the head fake and look for another breakout.
Otherwise just call it a blown pattern and look for other opportunities.
Everything also applies to a .
Just look for a strong and for the break to the downside.