Consolidation

Consolidation describes a stretch of chart in which the distance between the high and the low of each period narrows relative to what came before, usually after a directional move. Nothing is being predicted by the word: it is a description of range contracting, and it is measured against the chart's own recent history rather than against any fixed figure, which is why the same stretch can be called consolidation on one timeframe and ordinary movement on another. Because the description is relative, tools that measure range are commonly used to say when it is happening rather than leaving it to the eye. A consolidating stretch is also where the boundaries readers draw tend to cluster tightly together, so the same period often carries several overlapping labels at once. What consolidation does not tell anyone is which way price leaves it, or when. The contraction is observable; the exit is not, and it becomes describable only once it has already occurred.