Proximal and distal lines used here to highlight a type of consolidation pattern known as a triangle pattern. Consolidation patterns are commonly understood to represent the redistribution of an asset due to shifts in sentiment, profit taking and/or revaluation.
In this particular case, due to recent break of an area of price-interest (5,800-6,200), I would venture to assume this consolidation is caused by profit taking and is most likely going to lead to a retest of said area. However, my outlook is neutral until price will have broken out of consolidation in either direction.
Understanding consolidation is fundamental to a trader's success and should not be overlooked.
In this particular case, due to recent break of an area of price-interest (5,800-6,200), I would venture to assume this consolidation is caused by profit taking and is most likely going to lead to a retest of said area. However, my outlook is neutral until price will have broken out of consolidation in either direction.
Understanding consolidation is fundamental to a trader's success and should not be overlooked.