For Business

Price Action

What Is Consolidation

Consolidation is a stretch where the price goes sideways and the days get smaller: a market settling between two moves. This paper shows you a real one drawn from three weeks of the euro in August 2025, the idea of a market catching its breath, the stretch on the daily chart and opened into its fourteen days, and the Market Watch columns that show the size of the day on your platform.

Difficulty
Advanced
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

This paper is locked

Read it in the browser and keep the PDF with Premium, or buy this one paper.

Buy this paper — $3Get Premium

The days get smaller

Consolidation is a stretch where the price goes sideways and the days get smaller. Draw each day as a column as tall as its range and the stretch shows itself: from mid-July to 1 August 2025 the euro against the dollar moved about 103 pips a day — a pip being the fourth decimal place, the smallest step most people count in — and from 4 to 21 August about 70. For three weeks the price stayed between 1.1528 and 1.1730, and the days inside that band were smaller than the days before it.

Catching its breath

The picture is a market catching its breath. A move comes in with big swings; then the swings shrink and the price settles inside a narrow band, day after day; then a move goes out. The band is the consolidation. The word describes what the market is doing while it is inside — settling, with small days and no direction — and says nothing about which way it will leave. Rectangles, triangles and flags on this shelf are consolidations with particular outlines.

This paper is locked

Read next