Consolidation

A pause in a market's direction, bounded above by an area where selling has repeatedly appeared and below by one where buying has. The band can be flat, as in a rectangle, or narrowing, as in a triangle or a pennant. Several named chart shapes are simply consolidations drawn with different boundaries, which is why the same stretch of chart can be described accurately by more than one of them.

It is recognised by what stops happening: bars begin to overlap, the true range contracts against its own recent readings, and each attempt beyond the band returns inside it. Volume, where it is available, conventionally thins through the phase. None of these is a definition, and the band's edges are drawn by eye, so two readers will place them a little differently.

The difficulty is that the end of a consolidation is only visible afterwards. A move beyond the band frequently returns into it, a pattern common enough to have its own name, and practitioners disagree about what should count as a genuine departure: a close beyond the boundary, a stated distance beyond it, a volume condition, or a retest that holds. Each convention produces a different count of how often the band's break persists, which is one reason published studies of breakouts disagree with each other.