Forex consolidation.

Forex trading is replete with a lot of unclear terms that are often found in analytical data and market reviews, one of these terms is Forex trend consolidation.

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

The reasons preceding consolidation are the release of important economic events, the rate reacts sharply to the news, but the movement does not last indefinitely and gradually the price begins to not suit sellers or buyers.

There is a reduction in the number of transactions and a decrease in overall trading volumes, and the trend begins to roll back to new positions.

At some point, the current exchange rate begins to completely suit both the sellers and the buyer; this will be Forex consolidation; when it occurs, the price may fluctuate within just a few points and not have a clearly defined direction.

This phenomenon resembles a flat , but unlike the latter, consolidation occurs after sharp price jumps, and a flat can occur at any time.

Therefore, despite the similarity of these two phenomena, they have a slightly different cause. The end of consolidation is usually the appearance of a pronounced trend in the market and an increase in trading volumes. It is at this moment that trades are opened in the direction of a new trend.