A market consolidation phase is a period when the price of an asset trades within a narrow range after a large price movement. This refers to a period in financial markets, including digital assets, characterized by reduced price volatility and a horizontal price movement following a significant trend, either upward or downward. During this phase, buying and selling pressures reach a relative equilibrium, leading to price stabilization within a defined range. It often precedes another substantial price movement as market participants accumulate or distribute assets.
Context
Market consolidation phases are closely watched by traders and analysts as they can indicate a period of indecision or preparation for the next major price trend. News reports often discuss these periods, attempting to interpret whether they represent a pause before continuation or a reversal of the previous market direction. Understanding these phases is crucial for strategic entry and exit points in trading digital assets.
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