The 60 min bullish consolidation at support is a continuation pattern in the 60 min time frame that offers a nice swing trade setup for the trader. Traders can often enter a stock using this chart pattern and exit it within a few days. This pattern is an extension of the bullish consolidation at support that I have written about. The only difference is that they appear in different time frames.
Besides using this pattern as a trade setup, the trader can also use this to analyze stocks and indexes.
The diagram above shows the construction of the bullish consolidation at support. First of all, there needs to be a support area. The support can either be made up of a prior high that is overcome or some kind of price congestion that will act as support.
If you are not familiar with the concept of support and resistance, I highly recommend that you go through these articles on support and resistance below:
The bullish consolidation will occur at price support and then the stock will break out higher. Since there is support below, this pattern is very reliable.
Let's take a look at some chart examples below.
The 60 min chart of MCHP is a good example of how this pattern works. First of all, MCHP was in a 60 min uptrend. Then around early September 2017, the stock had a correction that lasted till the 6th of September. The stock then rallied and went above the highs made in early September.
If you know about the concept of support and resistance, one of the rules is that an old high that is overcome will act as a support for the stock. Since the stock has overcome the old highs, the 88.00 area now acts as a support area. Notice how the stock consolidated around the area.
This is what we call a consolidation at support.
After trading sideways for awhile, the stock then broke above the consolidation. Traders can take the height of the previous upwards move and project it higher from the breakout to get a target. MCHP hit the target and then declined.
The chart above is the 60 min chart of DLTR. I have drawn a box over the consolidation so that you can see it clearly. Notice how the stock consolidated at the prior high which now acts as support. The stock eventually broke out above the box. However, it did not immediately shoot higher but continued to drift sideways at the top of the first box.
This can also be considered another bullish consolidation at support pattern. Eventually the stock gap up and moved higher. While the basic requirements of this pattern is a consolidation at support, there will be many variations to this pattern. When you spend time trading this pattern and analyzing stocks that have done this pattern, you will be able to spot them better.
If you want a reliable pattern that have a higher odds of success, then the bullish consolidation at support is a very good chart pattern to learn. Not only does it work in the 60 min time frame, it also works in the daily time frame and the weekly time frame.
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