Hi hi.
As what the title suggested, may I ask if you fellow traders could share what you know on how you identify and avoid consolidation periods?
I tried at bolinger bands and moving average, but I can’t seem to notice it is a consolidation until I take a few trades.
And when the consolidation is over I am often late for the breakout.
Any reply is greatly appreciated.
Thank you!
I think you need a shift in perspective first. Stop avoiding the consolidation, and learn to use it as a low-risk entry opportunity. After a consolidation, the price will either continue the original move, or reverse it. Obviously the market will try to trick you into thinking it’s going to do the opposite, and that’s where the technical trading plan comes in.
Personally I would use defind horizontal support/resistance to base my analysis off of. These are levels with price-markers that do no change as time goes by. In this way, a certain level can have significance on both a 5min chart and a Weekly chart. There are many tools to analyze horizontal support and resistance, and you can find them all for free on this forum and around the web, as well as a few choice books.
Good luck!
Hi Akeakamai,
Thanks for your reply. I guess you’re right, I’ve been trying to avoid them and that’s why I ended up missing the boat.
I’ll try to hone up my S/R skills, thanks much!
Additional to Akeakamai, you can use divergence for breakout from the consolidation and Elliott waves for entering to the consolidation as well as end of it.
Peace