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A breakout from a consolidation pattern signals a victory by either buyers or sellers over the other. Standard breakout trading techniques include buying long and covering short when prices break through the resistance level, or selling short and covering long when prices drop below support.

The longer a consolidation period and the narrower the boundaries of the consolidation, the stronger the subsequent breakout. However, the longer the range, the more traders will start paying attention to it and; long ranges will often have more false breakouts as the professionals try to shake off the amateurs.

By consolidating shares, the number of shareholders can be reduced as they may sell their shares, which can make things more streamlined for the company. Finally, consolidation can also help to reduce costs.

Consolidation is neither positive nor negative on its own. Sometimes a consolidation period emerges after a healthy price movement. Traders, careful about possible overbought or oversold positions, may look to smooth out movements before another trend emerges.

The consolidation phase is part of the industry life cycle when organic growth in an industry slows. Companies continue to increase their market share and offer customers new services by acquiring or merging with other companies. The industry tightens as fewer companies are able to survive independently.

0:18 2:07 How can you tell if a stock or an index is consolidating? - YouTube YouTube Start of suggested clip End of suggested clip The scenario by and large defines the consolidation phase let's delve a bit deeper into this marketMoreThe scenario by and large defines the consolidation phase let's delve a bit deeper into this market phenomena. And learn how to identify. And trade during such phases.

Stock consolidation is a market condition that refers to when the stock trades within a narrow price range, neither continuing nor reversing the trend. Since the stock price moves in a limited range, it offers very few trading opportunities.

Consolidation is a phase when a stock or an index trades within a range. The trend is said to be sideways and may vary depending on the circumstance. Once this range is broken, it may lead to bigger moves, but until the range is intact, the movement cannot be clearly predicted.