When there is a consolidation/or price keeps rotating inside a 'value area' for a long time along with low volumes, it means that in this price region, neither the buyers nor the sellers are willing to take the price Up or down. Hence, trading is going on but not in large contracts. The buyers dont see any future value in the stock and the seller dont see it as over valued.
But, when the price starts to move towards the 'upper level' of the value area, there is always a possibility of breakout depending upon the volume profile prior to the move.
Hope this explains the point.
hospitalityforu
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@Minhaj_AK, thanks for the inputs..closely Monitoring the Same pattern for Balaji Amines..can you reflect on that Please...
johntradingwick
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@Minhaj_AK, I would like to add just one important point to this. During the consolidation phase when the "retail" buyers and sellers aren't showing much interest, the institutions are always reaccumulating their positions. While doing this, they try not to push the prices much, but as soon as their orders are filled, they start moving the prices back up. In this way, we get a breakout and that's when the retailers start showing interest and ultimately the volume expands.
Minhaj_AK
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@johntradingwick, yes. Thanks for adding this important point as well.
@OnePlus9, it means contraction of price value. If there is a spike in volume during the breakout of the resistance zone, then the breakout may sustain for a long period. The momentum of price after a breakout with huge volume (after dry volume)could be huge........PLEASE IGNORE MY POOR ENGLISH.
OnePlus9
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@nmk2296, thanks . can you please give past examples of this ?
When there is a consolidation/or price keeps rotating inside a 'value area' for a long time along with low volumes, it means that in this price region, neither the buyers nor the sellers are willing to take the price Up or down. Hence, trading is going on but not in large contracts. The buyers dont see any future value in the stock and the seller dont see it as over valued.
But, when the price starts to move towards the 'upper level' of the value area, there is always a possibility of breakout depending upon the volume profile prior to the move.
Hope this explains the point.