Someone Has to Win the Fight

Whenever you see a period of price consolidation, or compression, on a chart, it tends to indicate that some type of disagreement is taking place between buyers and sellers. As an example, we may see a series of lower highs, but also higher lows. And thus the disagreement. These disagreements can be of the quiet, mild variety, or they can be violent, in terms of the sheer size of the price swings and intensity of the moves, along with volume. Generally speaking, the mild consolidations are bullish and the violent ones are bearish. But there are plenty other considerations on that front, such as the prior trend, among other factors. A real-time example of this would be the small cap ETF, IWM, on the 30-minute, chart. Note the lower highs, but higher lows, denoted by the light blue lines, below. Like all disagreements in life, though, it will resolve its way in some way, shape or form. Whichever way this disagreement resolves should give us good insight into the market's next real directional move, beyond the drift we have seen thus far.