Sideways Patterns

stocks' prices just moved in three directions, up, down and sideways. For stocks that are moving in a sideways, not trending price movement and can be divided into three basic categories. Trading in the range of congestion and consolidation

trading in the range

stock that is " trading in the range 'means that its stock price has been bouncing up and down between the level of support and resistance levels.

when the stock traded in a range, the customer support it at the bottom of the range (support). When meetings on top of its range (resistance), the buyers refuse to pay a higher price, while others take their profits. So, the price falls again.

Congestion

In technical analysis, stock that is in the area of ​​congestion is that its stock price changes within a narrow range cijena.Cijena moving sideways gets stuck.

form of congestion patterns of resistance if it falls under a ragged pattern of congestion. This is because traders who bought at high prices will make their money when the price bounces close enough to what they paid for. Likewise, congestion forms of support, if prices rise above the congestion area.

Due to the congestion area indicates the equality of supply and demand, traders are typically told to avoid trading stocks moving in the congestion area. It is better to wait until the stock breaks the upper or lower limit before entering the trade.

Consolidated

consolidation pattern, as opposed to the congestion pattern, the retailers' best friend. It provides opportunities for traders who trade properly.

stocks in consolidation pattern moves laterally in a very wide range cijena.Konsolidacije samples are usually formed as stocks build its base or rest during the upward trend or decline. You will find that consolidation is often followed by uptrends or downtrends.

resistance and support levels within the consolidation area are created through the upper and lower limit of the stock price.

Finally, in some places, after the stock price breaks through the identified areas of support or resistance, volatility increases quickly, shaking the increasing volume and thus the explosion of stock options offer to generate profits. If traders are playing on the right side, you can powerfully when the price explodes.

more shares traded in the consolidation area, the more explosive stock moves backwards or minus when it breaks the resistance or support level.