Consolidation
This category covers a broad range of price formations that indicate consolidation. These formations do not have a specific lifetime and will often pop up and then disappear frequently. Whenever they do pop up, though, it is worth taking a look. While consolidation itself may not be interesting, it is what happens at the end of the consolidation that can be very interesting and profitable. Many of the other formations will change to a consolidation formation if nothing happens when price reaches the designated inflection point. This is a good thing because it keeps the symbol/interval on the radar so you can monitor it to see if price does eventually break up or down.
 Consolidation 2-min |
 Consolidation 60-min |
In the examples above, the highlighted region (red rectangle) indicates the area in which we expect the reaction, but it may not be immediate. Consolidation represents tension and uncertainty in the market and it can continue for some time. However when it does come to an end the reaction is generally swift and violent.
|
Note: If you would like to actually see the inflection point zones drawn in the price pane as in our examples above, then see the Chart Zone Tool section. |
Alerts
Consolidation formations, by default, will generate an alert condition whenever price moves past the lowest-low of the prior 2 bars or the highest-high of the prior 2 bars.
You can also use the two Alert Padding parameters to delay the alert condition until a more significant move has taken place. See the Alert Padding section for details.
This alert condition will show up immediately in the watchlist component (i.e., ♫ in the Status column). If pop-up and/or audible alerts are turned on then those will be generated as well. Email alerts are also available, but only in the chart component. See Settings for more information on the alert-related parameters.
|
Note: If a solid black circle (●) is displayed in the Status column in the watchlist along with the alert condition (♫) this indicates that price has both reached the inflection point is trading at volume that is above the average volume for the security. This might indicate that price is moving rapidly in the desired direction. |
Parameters
The parameters that can be adjusted for the Consolidation formation are:
•Minimum Rank for Display
•Maximum Age
•Alert Padding - Type
•Alert Padding - Factor
See the Settings section for more detail on these parameters.
