Have you ever noticed that price moves in consolidation boxes and ranges far more often than when there is a clear trend higher or lower?

Price spends its time in all markets moving sideways and in consolidation boxes far more often than it moves in a trend.

This is very important to know because to successfully trade the markets; you need to be able to identify and trade consolidation boxes.

This post goes through exactly what consolidation box trading is and how you can do it with free MT4 and MT5 consolidation indicators.

NOTE: Want a full list of some of the best free MT4 and MT5 indicators you can use in your trading? You can get them below.

Best Free Indicators: Get The Best Free MT4 and MT5 Indicators

 

What is Consolidation?

Consolidation is what price action does after a move higher or lower.

You will often find ranging and consolidation price action after the price has made a strong move higher or lower.

For example, the price makes a strong move lower, and then it moves into a period of sideways movement where the price doesn’t make any decisive moves in either direction.

Price action goes through this phase to consolidate and prepare for its next move. You will see this in the example chart below. Price makes a strong move lower before it moves into a consolidation phase.

NOTE: You may also like the Darvas box indicator.

Consolidation trading

How to Trade Consolidation

One important thing to note about consolidation periods is that price will often break the consolidation period by moving in the same direction price was previously trending.

In the example chart below, you will see that price was in a trend lower before moving into the sideways consolidation.

Price then breaks this consolidation period by breaking out lower in the same direction price was trending before moving into the range.

The easiest way to trade consolidation areas is to identify the previous trend and then look for price to break out in the same direction.

For example, on the chart below, when the price breaks below the consolidation phase, we would be looking to make short trades.

Trading consolidating markets

 

Consolidation Box Indicator MT4

NOTE: If you do not yet have the best MT4 charts to use these indicators, you can read about how to get the best free trading charts and the broker to use these indicators with here.

Consolidation box indicators can help you first identify when the price is consolidating and then where to make potential trades.

This particular MT4 consolidation box indicator can help you find when the price has moved into a consolidation or range phase. It will also help you create trading strategies around these consolidation boxes.

One handy feature of this indicator is that the boxes are recreated to show you time frame specific consolidation as you change time frames.

You also have the choice of how many candlesticks make up a consolidation period and the height in pips. 

You can get the consolidation box indicator for MT4 here.

 

Consolidation Box Indicator MT5

This MT5 consolidation box indicator is similar to the MT4 indicator in that it will hunt consolidation periods and mark them with a box on your chart. These can be incredibly handy as you can use these boxes to find potential trades.

A handy feature of this indicator is that it marks potential entry signals for where you can make trades. It also marks areas where you can potentially put your take profit and stop-loss levels.

This indicator does not redraw, and you can use it on any market or time frame.

Consolidation indicator MT5

You can get the consolidation box indicator for MT5 here.

 

 Note: Don’t know how to install and use these indicators? Read How to Download, Install and Use MT4 and MT5 Indicators.  

 

Lastly

If you plan on being a successful trader, then you must learn how to trade sideways and consolidating markets.

Because price action tends to range and consolidate far more often than it moves in clear trends, you will miss many trading opportunities if you don’t know how to trade these markets.

Using a MT4 or MT5 consolidation box indicator can help you find these consolidation markets and also where you can make potential trades.

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Pip Hunter
Pip Hunter

I hunt pips each day in the charts with price action technical analysis and indicators. My goal is to get as many pips as possible and help you understand how to use indicators and price action together successfully in your own trading.