NhaDuHanhFX - Congestion Zone (Complete & Incomplete)

2023년 2월 2일

When the market is trending, the momentum is strong, the price often moves quickly in one direction. In the higher time frame, we see that the closing price of the candlestick is often far away from the previous candlesticks.

When the market is sideways, the momentum is weak, and prices often move slowly around an area. In the higher time frame, we see that the closing price of the candlestick is usually within the range of the previous candlesticks.

The Congestion Zone is a price action indicator that marks out such a sideways market area. It has many patterns: Complete and incomplete patterns.

- Complete Congestion Zone (Default): It includes at least 3 candlesticks that the next candlestick has a closing price within the previous candlestick range. Then, if a candlestick closes outside the range of the previous candlestick, it is a sign that the market has most likely ended the sideway, moving into a trending state.

- Incomplete Congestion Zone (Settings Option): It is more complex Congestion patterns. It also marks out sideways of the market. However, during the congestion formation, the price tried to break out of the zone with a candlestick closing outside the previous candlestick , right after that the price turns back and continues to congest.

In addition to using the Congestion Zone to predict if the market is likely to have moved from sideways to trending. The Congestion Zone is also used as a Support & Resistance area. When the price goes away and returns to the Congestion Zone, it will likely reverse.

Pay attention to the price area that previously appeared a lot of congestion zone. It is more likely to reverse.