A Consolidation is an area on the price chart where the stock crawls horizontally. The best consolidation pattern have flat tops, flat bottoms, or both.
When it comes to calculating price targets, I like to follow Perry Kaufman’s formula. According to him, for any horizontal consolidation pattern, the target is above the breakout of the resistance line at a point equal to the height of the consolidation area (the resistance level minus the support level added to the resistance level) Let’s call it lenght L. That makes the expected move equal to the extreme volatility of the consolidation area.
For longer consolidation regions like this one, I prefer to take profits at half of L. For eg.- In $TSLA chart, $402 makes the point L. And $340 makes L/2. Also, instead of using sharp exit price, I use a target range. By doing this, I’m increasing my probability of hitting the target zone and securing my profits.
In following charts $TSLA is showing Consolidation in both daily and weekly charts. Price Targets and Stop Price are defined in the chart.