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What is Continuation Pattern
Continuation pattern shows that there is a Temporary
pause in the trend
Price consolidate after a big move
During the uptrend or downtrend after a big rally, the
buyers and sellers resp. Take a pause before continuing
there previous action.
The formation of continuation Pattern is said to be
complete after breakout and continue in the direction of
trend
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Most Common Continuation Pattern
Triangles
Rectangles
Flags
Wedges
Pennants
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Triangles
There are three main types of Triangles
Symmetrical
Ascending
Descending
Ascending Triangle is bullish whereas the
Descending Triangle is bearish. The
Symmetrical Pattern is a neutral pattern.
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Symmetrical Triangle Pattern
If the prior trend is up before the triangle formation the price
eventually break out to continue higher. And if the prior trend
is down before the triangle formation price break out to
continue lower
Bullish Symm.
Bearish Symm.
triangle
Triangle
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Ascending Triangle Pattern
This is a bullish continuation pattern, in this pattern the
upper trend line is flat and lower line is rising
because buyers are more aggressive than sellers.
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Descending Triangle Pattern
This is bearish continuation pattern, in this the lower
trend line is flat while the upper line downward this
shows sellers are more aggressive than buyers.
Descending Triangle in
downtrend (Bearish)
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Trading The Triangle
• Best way to trade the triangle is to trade the
breakout
• Wait for pattern to be completed
• Do not trade during formation of triangle wait
until trend line break out.
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Measuring The Target
The simple method to calculate the target is to calculate the
widest distance of triangle (in this case AB) and apply the
distance to breakout point and project Din the direction of
trend (look at point CD)
B Breakout point
C
AB=CD
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Rectangles
This is the continuation pattern in this price consolidate in
between two parallel line forms a trading range. This shows
the market is taking pause from previous move and likely to
continue in the same direction once the price break out the
rectangle.
Breakout
Rectangular Pattern
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Flags
Bullish Flag Pattern
In this Pattern, the original trend is up (bullish) and after a big move the price
forms flag like pattern trading in narrow downward channel(the flag will
point down and have a negative slop). Sometime this downward channel
may rectangular .
Flag pole
Break out buying zone
Flag pole
Short at breakout of
slopping up channel target BEARISH FLAG
price is pole height from PATTERN
break out point
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Pennants
A pennant is usually preceded by a strong move in prices, almost
in a straight line. Buy in uptrend as soon as the pennants
break out for target equal to pole height. Short in downtrend
at breakout of pennant for target equal to pole height.
Bearish Pennant
Break out Point
pole
pole Break out point
Bullish Pennant
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Wedges
Wedges are another form of continuation pattern since
they also signal a pause in the current trend. They
are somewhat similar to triangles since they are
identified by two converging trend lines.
BUYING POINT
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Wedges
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Recommendation
This is end of continuation Pattern Pl go through
next topic ie. Reversal Pattern Do not directly
jump to the Strategy.
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THANK YOU
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