Overview
The Consolidation Indicator is a specialized TradingView tool designed to detect price consolidation phases—periods where an asset trades within a confined range. Recognizing these phases helps traders anticipate breakouts or prepare for low-volatility conditions.
Key Features
Indicator Settings
Customize the tool with these adjustable parameters:
| Parameter | Description | Default Value |
|---|---|---|
| Timeframe | Chart period for analysis (e.g., 1H, 4H) | User-defined |
| Price Smoothing Length | Smooths price fluctuations | Minimum 1 |
Average Range Length (range_len) | Calculation window for average price range | 14 |
Narrow Range Threshold (NR_threshold) | Max range percentage to qualify as "narrow" | 80% |
| Consecutive Narrow Ranges | Confirm consolidation phases | 3 |
| Candle Color | Visual highlight color | Bright green |
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Indicator Outputs
Visual Cues
- Colored Candles: Consolidation periods appear as semi-transparent green candles (darkening with prolonged narrow ranges).
- Breakout Icons: An orange "💥" marks potential breakout points below the chart.
Alerts
- Consolidation Start: Signals the beginning of a narrow-range phase.
- Breakout Detected: Indicates a possible exit from consolidation.
Practical Application
- Add the Indicator
Import it to your TradingView chart via Custom Indicators. - Optimize Settings
Adjust thresholds and timeframes to match your strategy. Monitor Signals
- Green candles = Consolidation in progress.
- Breakout icons = Trade opportunities.
- Set Alerts
Enable notifications for real-time updates on consolidation/breakout events.
Pro Tip: Combine this tool with volume analysis or trend lines for higher-confidence trades.
FAQs
Q1: Can this indicator predict breakout directions?
A: No—it only flags consolidation and breakout conditions. Directional bias requires additional analysis (e.g., support/resistance levels).
Q2: What’s the ideal timeframe for swing traders?
A: Try 4-hour or daily charts to filter noise while capturing meaningful ranges.
Q3: How does it handle volatile assets like crypto?
A: Increase the range_len to 20+ for broader average-range calculations, reducing false signals.
Q4: Are there known limitations?
A: In strongly trending markets, consolidation phases may be brief or less reliable.
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Always validate indicator signals with fundamental or sentiment analysis to mitigate risks.