Market consolidations

[Ferru]

If a market goes into a range following a trend, is the breakout, when it occurs, more likely to be in the direction of the trend or in the opposite direction?

Thanks

Jeff

 

[BeginnerJoe]

Both are equally possible. It could be taking a breather before resuming the previous course, or it has reached the turning point. The reason that caused the initial move could be used to assess the outcome. But often the move overshoots an expected target. It's safer to wait for the actual turn than guessing where it is.

 

[Ferru]

Thanks Joe

Jeff

 

[tomorton]

Good question, which I've not seen before - maybe a lot of peopler think it's just too obvious. I tend to think both outcomes are possible, but both are not EQUALLY possible.

A range does not have to be a rectangle pattern but assuming it is, see Encyclopedia of Chart Patterns, Thomas N. Bulkowski.

 

[Ferru]

Good question, which I've not seen before - maybe a lot of peopler think it's just too obvious. I tend to think both outcomes are possible, but both are not EQUALLY possible.

Thanks Tomorton.

Which is the more likely outcome?

Would you zoom out to a larger timescale to determine which is more likely, given that trends self-perpetuate, and it may be that a trend on the bigger timescale is merely encountering a bit of support or resistance, before continuing on its journey?

Jeff