Forex consolidation.

Forex trading is rife with confusing terms that often appear in analytical data and market reviews. One such term is Forex trend consolidation.

Forex consolidation is a slowdown in price movement after a sharp change. The price reaches a certain minimum or maximum, then slows down.

The reasons preceding consolidation include the release of important economic events, the rate reacts sharply to the news, but the movement doesn't last indefinitely, and gradually the price begins to dissatisfy either sellers or buyers.

The number of transactions and overall trading volumes decrease, and the trend begins to reverse to new levels.

At some point, the prevailing rate begins to completely satisfy both sellers and buyers, leading to forex consolidation. When this occurs, the price may fluctuate within a few pips and have no clear direction.

This phenomenon resembles a flat , but unlike the latter, consolidation occurs after sharp price surges, while a flat can occur at any time. Therefore, despite the similarity of these two phenomena, they have slightly different causes.

Consolidation usually ends with the emergence of a clearly defined trend in the market and an increase in trading volumes. It is at this point that trades are opened in the direction of the new trend.