In one lineConsolidation stores price inside a range. A breakout is an attempt to move beyond that range.
Do not confuse a touch with acceptance
Price can briefly move outside a range and immediately return. A stronger breakout usually shows follow-through or continued acceptance beyond the prior boundary.
Failed breakouts are useful information
If price tests outside the range and quickly returns, that failure tells you the market did not maintain the new area.
Simple question:Did price only break the line, or did it actually hold and trade beyond the area?
Remember this
- Consolidation = compression.
- Breakout = attempt to expand.
- Follow-through matters more than the first touch.
Educational content.
This lesson is provided for general educational and informational purposes and is not personal financial or investment advice.