Bilateral/Consolidation Chart Patterns Oil

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

• Symmetric Triangles Patteerns - Consolidation crude trading chart patterns
• Rectangles Patteerns - Ranging market

Consolidation Patterns

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

Oil Trendlines can be plotted connecting the lows & 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 pattern. An early or late breakout is more liable to fail, and therefore less reliable. After a price break out the apex forms support and resistance zones for the price. Oil Price that has broken out of the consolidation chart pattern shouldn't retrace past the apex point. The apex point is used as a stop loss setting area for the open Oil trades.

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

The consolidation chart patterns form when there's a tug of war between the buyers and the sellers and the market can not decide which way to move.

Consolidation Trading Setup

However, this chart setup cannot 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 and moved in one direction. Now how do we ensure that we are on the winning side?

Break out Downwards Sell Signal after a Consolidation Setup

Breakout Upwards Buy Oil Signal after a Consolidation Setup

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

Well we wait until price goes past one of the lines and put buy or sell orders in that specific direction. After consolidating, If crude price breaks-out the upper line we buy, if it breaks out out the lower line we open sell.

Alternatively if you do not want to wait out the consolidation chart setup, you can use pending orders. If you-wouldyou'd want to know more about pending orders navigate to the lesson: Stop Entry Oil Trading Order Types

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

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

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

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

Rectangle Pattern

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

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

A breakout of crude price action from this consolidation chart setup occurs 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 signal.

Rectangle Pattern Oil Trading - Consolidation Pattern

Oil Price Breaks the consolidation range after sometime & continues to move upward after an upward market breakout.