Bilateral/Consolidation Commodities Trading Chart Patterns Commodities

With bilateral/consolidation commodity chart patterns the commodity market can move in any direction. There are two different types of consolidation commodity chart patterns that form on commodities trading charts:

• Symmetric Triangles - Consolidation commodity chart patterns
• Rectangles - Range/ranging market

Symmetrical Triangles

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

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

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

These consolidation patterns form when there is a tug of war between the buyers and the sellers and the commodity market cannot decide which way to move.

Consolidation Commodities Trading Chart Pattern

However, this pattern cannot go on forever and just like in a tug of war one side eventually wins, looking at the commodities chart below see how the consolidation eventually had a breakout and moved in one direction. Now how do we make sure we are on the winning side?

Breakout Downwards Sell Commodity Trading Signal after a Consolidation

Breakout Upwards Buy Commodity Trading Signal after a Consolidation

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

Well we wait until commodities price moves past one of the lines and put buy or sell orders in that direction. After consolidating, If commodities price breaks the upper line we buy, if it breaks the lower line we sell.

Alternatively if you do not want to wait out the consolidation, you can use pending commodity orders. If you would like to know more about pending commodity orders go to the topic: Stop Entry Commodity Trading Order Types

The two types of stop order types used to trade consolidation commodity chart patterns are:

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

• Sell Entry Stop An order to sell at a level below the commodities price.

These are commodity orders to buy above the commodity market or to sell below the commodities market.

Rectangle Commodities Trading Chart Pattern

A rectangle consolidation pattern is a trading range with narrow commodities price action that forms a consolidation phase in commodities trading market. The trading range is defined by two parallel commodity trend lines which are horizontal and indicate the presence of support and resistance. This commodity pattern is drawn on a commodity chart using a rectangle, therefore its name rectangle commodity chart pattern.

For this consolidation commodity chart pattern, commodities price forms multiple highs and lows that can be connected with horizontal commodity trend lines that are parallel to each other. This commodity pattern forms over an extended period of time giving the pattern its rectangle shape.

A breakout of commodities price action from this consolidation pattern occurs when either of the horizontal line is penetrated and the trading range of this rectangle is broken. An upside breakout is a buy commodity signal. A downside breakout is a sell commodity signal.

Rectangle Pattern Commodity Trading - Consolidation Pattern

Commodities Price Breaks the consolidation range after sometime and continues to move upwards after an upwards market breakout.