Continuation Pattern
| Continuation Pattern |
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| See also |
Continuation Pattern is named a consolidation pattern too. This is an Area Pattern that breaks out in the course of the preceding tendency ( R.D.Edwards, C.H.W.Bassetti, J.Magee 2012, p.545). A continuation pattern is when a share price continues in the equal path. This involves any course from the present opening position in which a trend can be followed. This type of pattern is nothing more than a sequel in the improvement of ups and downs on a shared graph, and regularly shows a continuation of the dominant aim in asset value. Continuation patterns are a stop in the price action of a stock, and they frequently happen mid trend ( J. Moore 2018, chap.8). In the graphs, there is additionally a reversal pattern. This kind of pattern easily determines that continuation is in a dynamic method ( M.Hooper 2008, p.239). Patterns of continuation lead to be quite short-term, occasionally just several days, and are frequently forgotten as a result ( B.Rockefeller 2014, p.154)
Forms of Continuation Pattern
The most common types of primary Continuation Patterns are (Wiley 2019, p.36-38) :
- Triangles lead to be more generous structures that occur completely a trend. There are three kinds of them:
- A symmetric triangle is made by a price compression when the uncertainty of customers and merchants effects in reducing instability in such a way that rewards close to the center of the preceding trading range. The symmetric triangle is most likely to befall at the start of a trend when there is higher precariousness about the area.
- A descending triangle is formed by the current course form a short support level, and costs may rebound off that step while short-term tradesmen work for little profits.
- An ascending triangle can be defined as a horizontal in an upwards trend. This type is made by a continuation after the descending triangle.
- Flags are smaller models than triangles. This type is created by an improvement in a bull movement or a rally in a market slump. A flag is a congestion space that tends away from the way of the trend and typically can be separated by two parallel lines between the top and bottom of the structure.
- Pennants are irregular triangles usually tending to the trend, comparable to a descending triangle in a downward trend but without a top assistance line.
- Wedges are patterns that look like large pennants, with top and bottom line angling in an identical way but does not spread to a spot. Wedges can be falling or rising.
The larger structures of these models are more significant than the smaller forms ( Wiley 2019, p.36).
References
- Brandt L.P., (2011), Diary of a Professional Commodity Trader: Lessons from 21 Weeks of Real Trading, John Wiley & Sons, Hoboken
- Edwards D.R., Bassetti C.H.W., Magee J., (2012), Technical Analysis of Stock Trends, CRC Press, USA
- Hooper M., (2008), The Complete Guide to Online Investing: Everything You Need to Know Explained Simply , Atlantic Publishing Company, USA
- IFC Markets, (2014), Technical Analysis Explained: Learn Technical Analysis, IFC Markets
- Moore J., (2018), Trading Part-Time: How to Trade the Stock Market Part-Time!, Xlibris Corporation, USA
- Rockefeller B., (2014), Technical Analysis For Dummies, John Wiley & Sons, Hoboken
- Thomsett C.M., (2017), Candlestick Charting: Profiting from Effective Stock Chart Analysis , Walter de Gruyter GmbH & Co KG, Boston
- Wiley, (2019), CMT Level II 2019: The Theory and Analysis of Technical Analysis , John Wiley & Sons, USA
- Wilson L., (2012), Business of Share Trading: From Starting Out to Cashing in with Trading , John Wiley & Sons, China
Author: Paulina Zając
