Bilateral/Consolidation Chart Patterns Silver Trading

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

• Symmetric Triangles - Consolidation chart patterns
• Rectangles - Range market

Consolidation Trading Setup Patterns

Symmetrical triangles are xagusd chart patterns with converging trend-lines which form a consolidation phase. The technical buy signal from a symmetrical triangle is the upward 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 plotted connecting the lows and highs of the trading 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 xagusd chart pattern. An early or late break out is more liable to failure, & therefore less reliable. After a xagusd price break out the apex forms support & resistance zones for the price. Price that has broken out of the consolidation chart pattern shouldn't retrace past the apex zone. The apex zone is used as a stop loss order setting area for the open trades.

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

These consolidation chart setups form when there's a tug of war between the buyers & the sellers & the trading market can not decide which side to move.

Consolidation Trading Pattern

However, this trading chart pattern setup can't go on forever & just like in a tug of war one side will eventually win, looking at the chart below see how the consolidation eventually had a break out & moved in one direction. Now how do we ensure that we are on the winning side?

Break Out Down-wards Sell Signal after a Consolidation Pattern

Break Out Up-ward Buy Signal after a Consolidation Pattern

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

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

Alternatively if you don't want to wait out the consolidation chart pattern setup, you can use pending orders. If you-wouldyou'd like to learn more about pending orders go to the lesson: Stop Entry Trading Order Types

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

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

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

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

Rectangle Trading Pattern

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

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

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

Rectangle Pattern XAGUSD - Consolidation Pattern

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