Scribd
Upload
894 views17 pages

Continuation Pattern

This document discusses various continuation patterns in financial markets. Continuation patterns indicate a temporary pause in the prevailing trend before the trend resumes in the same direction. The most common continuation patterns are triangles, rectangles, flags, wedges and pennants. Triangles can be symmetrical, ascending or descending. Ascending triangles are bullish while descending triangles are bearish. Flags form after a strong move and consist of a pole and flag. Rectangles form a trading range between parallel lines. The document provides examples and explanations of how to identify and trade each pattern.

Uploaded by

swetha reddy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
894 views17 pages

Continuation Pattern

This document discusses various continuation patterns in financial markets. Continuation patterns indicate a temporary pause in the prevailing trend before the trend resumes in the same direction. The most common continuation patterns are triangles, rectangles, flags, wedges and pennants. Triangles can be symmetrical, ascending or descending. Ascending triangles are bullish while descending triangles are bearish. Flags form after a strong move and consist of a pole and flag. Rectangles form a trading range between parallel lines. The document provides examples and explanations of how to identify and trade each pattern.

Uploaded by

swetha reddy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 17

Continuation Pattern

MARKET SOLUTIONS
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

MARKET SOLUTIONS
Most Common Continuation Pattern

The most common continuation Pattern are

 Triangles
 Rectangles
 Flags
 Wedges
 Pennants

MARKET SOLUTIONS
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.
MARKET SOLUTIONS
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

MARKET SOLUTIONS
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.

Ascending Triangle in uptrend (Bullish)

MARKET SOLUTIONS
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)

MARKET SOLUTIONS
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.

MARKET SOLUTIONS
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

MARKET SOLUTIONS
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

MARKET SOLUTIONS
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

BULLISH FLAG Buy at breakout of slopping


PATTERN down channel target price is
pole height from break out
point
MARKET SOLUTIONS
Flags
 Bearish Flag Pattern
In this Pattern, the original trend is down (bearish) and after a big move the
price forms flag like pattern trading in narrow upward channel(the flag
will point up and have a positive slop). Sometime this upward channel may
rectangular . 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

MARKET SOLUTIONS
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

MARKET SOLUTIONS
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

Sloping Down Wedges is Bullish


because often it gives breakout in
opposite Direction

MARKET SOLUTIONS
Wedges

Rising Wedges is Bearish Selling point


because often it gives
breakout in opposite
Direction

Measuring the Price Target


The measuring technique for the price target for wedges is similar to that for
triangles. Simply measure the widest distance inside the wedge and project that
same distance from the breakout point.

MARKET SOLUTIONS
Recommendation
This is end of continuation Pattern Pl go through
next topic ie. Reversal Pattern Do not directly
jump to the Strategy.

MARKET SOLUTIONS
THANK YOU

MARKET SOLUTIONS

You might also like