Bilateral/Consolidation Chart Patterns Energies

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

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

Symmetrical Triangles Energy Trading Pattern

Symmetrical triangles are energies chart patterns with converging energies 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 signal. Ideally, a market breaks out from a symmetrical triangle prior to reaching apex of the triangle.

Energies Trend lines can be drawn connecting the lows and highs of the consolidation phase, the trend lines formed are symmetric and converge to form an apex. A breakout should occur somewhere between 60-80% into the triangle chart pattern. An early or late breakout is more prone to failure, and therefore less reliable. After a energies price breakout the apex forms support and resistance levels for the energies price. Energies 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 Energies trades.

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

These consolidation patterns form when there is a tug of war between the buyers and the sellers and the energies market can't decide which way to continue.

Consolidation Chart Pattern

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

Breakout Downwards Sell Energies Trading Signal after a Consolidation

Breakout Upwards Buy Energies Trading Signal after a Consolidation

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

Well we wait until energies price moves past one of the lines and put buy or sell orders in that direction. After consolidating, If energies price breaks 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, you can use pending energies orders. If you would like to know more about pending energies orders go to the topic: Stop Entry Energies Trading Order Types

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

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

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

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

Rectangle Chart Pattern

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

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

A breakout of energies 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 signal. A downside breakout is a sell signal.

Rectangle Pattern Energies Trading - Consolidation Pattern

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