Consolidation patterns (ascending triangles, rectangles, and descending triangles) are forms of continuation patterns. These patterns usually indicate that the sideways price action on the chart is nothing more than a pause in the prevailing trend and that the next move will be in the same direction as the trend that preceded the formation.

Ascending or descending triangles are rather difficult to search for. You will have to do some visual assessment of charts to finds stocks that meet this requirement. Expect that a good portion of stocks returned from this query will not meet your requirements. Look for charts that are showing well defined upward consolidating triangles and showing signs of wanting to break through that resistance. Often, there will be increasing volume as we near the breakout point, so watch for that as well.

Rectangle patterns, as shown below are easily identified, and you will find that the majority of the results are rectangles.

It is usually advisable to wait for the breakout, however this strategy will let you identify these patterns before they break out.

The settings for this query (and explanation of logic) are:

Volume Tab:

Number of shares traded > 200000 Used to eliminate thinly traded stocks. You can change this setting to match the exchange. Toronto exchange (TSE) may be lowered to 50000

Liquidity Tab:

Trading Activity 90%  Lookback Period 40 Days It's a good idea to use this setting in your queries, as it eliminates stocks that are not frequently traded. Use this setting if searching OTCBB and CDNX exchanges, as many of the stocks do not trade regularly.

Price Tab:

Close Price Greater 2.00 Can be changed to suit your portfolio level and trading style. During the learning and testing phase, it is a good idea not to be too restrictive so you can determine how the patterns develop.

Consolidation Tab:

Lookback period 20 Days Analysis Performed on HIGH Price Price Tolerance (+/-) 0.75 % Min # of Positive Tests Within Price Tolerance 6