Bilateral/Consolidation Chart Patterns CFD

With bilateral/consolidation cfd chart patterns the cfd market can move in any direction. There are 2 types of consolidation cfd chart patterns that form on cfd charts:

• Symmetric Triangles - Consolidation cfd chart patterns
• Rectangles - Ranging market

Consolidation Chart Setups

Symmetrical triangles are cfd chart patterns with converging trendlines which form a consolidation period. The buy signal from a symmetrical triangle pattern is the upside break, while a downside break is a technical sell signal. Ideally, a market breaks out from a symmetrical triangle prior to reaching the apex of the triangle.

Trend Lines can be drawn connecting the lows and highs of the consolidation phase, the cfd trend lines formed are symmetric and converge to form an apex. A breakout should occur somewhere between 60-80% into the triangle cfd chart pattern. An early or late break out is more liable to failure, and therefore less reliable. After a price breakout the apex forms support and resistance levels for the price. Price that has broken out of the triangle chart pattern shouldn't retrace past the apex point. The apex point is used as a stop loss order setting area for the open trades.

When these consolidation trading chart setupss form we say that the market is taking a break before deciding the next direction to take.

The consolidation chart patterns form when there's a tug of war between the buyers & the sellers & the market can not decide which way to proceed.

Consolidation Chart Setup

However, this trading chart setup can't go on forever and just like in a tug of war one side eventually wins, looking at the chart below see how the consolidation eventually had a breakout and moved in one direction. Now how do we as traders ensure that we are on the winning side?

Breakout Downward Sell Signal after a Consolidation Chart Setup

Breakout Upward Buy CFD Signal after a Consolidation Chart Setup

Now back to our question, how do we make sure we are on the side that is winning?

Well we wait until price goes past one of the lines & put buy or sell trade orders in that specific direction. After consolidation, If trading price breaks-out the upper line we buy, if it breaks-out the lower line we sell.

Alternatively if you do not want to wait out the consolidation chart setup, you can use pending orders. If you-wouldyou'd want to learn more about pending orders go to the topic: Stop Entry CFD Order Types

The 2 types of stop order types used to trade consolidation trading chart patterns are:

• Buy Entry Stop An order to buy at a point above the price.

• Sell Entry Stop An order to open sell at a point below the price.

These are cfd orders to buy above the cfd market or to open sell below the market.

Rectangle Trading Pattern

A rectangle consolidation trading chart setup is a trading range with thin price action which forms a consolidation phase in market. The price range is defined by 2 parallel trend lines which are horizontal & indicate the presence of support and resistance. This pattern is plotted on a chart using a rectangle, hence the name rectangle trading pattern.

For this consolidation cfd chart pattern, price forms multiple highs & lows that can be then connected with horizontal trend lines that are parallel to one another. This pattern occurs over an extended period of time, giving the pattern its rectangle shape.

A breakout of price action from this consolidation chart setup forms when either of the horizontal line is penetrated & the price range of this rectangle pattern is broken. An upside breakout is a buy signal. A downside breakout is a sell trade signal.

Rectangle Pattern CFD Trading - Consolidation Pattern

Price Breaks the consolidation range after sometime & continues to move upwards after an upward market break out.