Resistance and Support as Keys to Consolidation Reading
As with all types of trends, resistance and support are essential ingredients to understanding the nature of consolidation and to identifying when the period of consolidation is coming to an end. The uptrend and downtrend end when reversal patterns appear, but without any movement in the consolidation trend, the signals have to take a different form. This is where the breakout is the key to tracking consolidation.
Key Point
A breakout from consolidation succeeds only if a new dynamic trend is then established. Some breakouts simply retreat, and consolidation does not end.
When traders do not react to consolidation as a form of trend, they easily overlook the role of breakouts. However, ...
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