This is one of the major reasons why as much as possible I avoid trading extremely consolidated stocks. Extreme consolidation can only mean one thing, either it will breakout or breakdown.
Today MEG breakdown with accompanying huge volume. This is a bad sign because it simply shows that the current market sentiment has suddenly become bearish for MEG. And take note among the two emotions( Greed/Fear) FEAR has the most impact. And if FEAR is strong it will drive the price of this stock down.
But these kind of scenario can be avoided in the first place if we refer to the MACD. It has signaled a weakness during the extreme consolidation phase of MEG, therefore informing us ahead to exit our trade immediately.
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