Definition – What does Consolidation Pattern mean?
A consolidation pattern refers to a range of technical analysis formations that appear when a currency pair’s price action has broken from the primary trend and is staying flat within a certain range. A consolidation pattern often occurs after a strong trend has leveled out. The consolidation pattern will continue until a breakout occurs.
ForexTerms explains Consolidation Pattern
A consolidation pattern occurs when a strong trend levels out and the market is trying to figure out what comes next. This can be caused by new fundamental news or simple exhaustion of clear technical signals. A consolidation pattern can last for a long time with many false breakouts. Depending on a trader’s time frame and the support and resistance levels seen on that time frame, a consolidation pattern may hold for seconds, hours, weeks or even months. The broadening formation is a popular consolidation pattern that works on many time frames.