A period of pause after a a period bullish or bearish trend.

Consolidation usually refers to a pause during a trend, or even before reversal. It can reflect bulls and bears not wavering their positions thus causing prices to move horizontally in a relatively smaller range. Along with thin volume, consolidation can also reflect traders on the sideline, awaiting more direction such as economic news, or statements from the central bank. It can also represent a period where the price of an instrument is perceived to be “fairly” priced.

Congestion is a specific type of consolidation where the volatility is narrowing.