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Lesson 4 Continuation Patterns
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Technical Analysis Workshop Series
Session Four
DISCLOSURES & DISCLAIMERS
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research material.
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
DISCLOSURES & DISCLAIMERS
Nothing in this research material constitutes a representation that any investment strategy or
recommendation contained herein is suitable or appropriate to a recipient’s individual
circumstances or otherwise constitutes a personal recommendation. It is published solely for
information purposes, it does not constitute an advertisement and is not to be construed as a
solicitation or an offer to buy or sell any securities or related financial instruments.
No representation or warranty, either expressed or implied, is provided in relation to the
accuracy, completeness or reliability of the information contained herein. The research material
should not be regarded by recipients as a substitute for the exercise of their own judgement. Any
opinions expressed in this research material are subject to change without notice.
CHART
CONSTRUCTION SUPPORT &
RESISTANCE
TRENDLINES &
CHANNELS Q & A CHART TYPES
PIVOT
POINTS
S
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Agenda
• Why use Chart Patterns?
• Chart time frames
• Triangles
• Flags
• Rising and Falling Wedges
• Application
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Why use Chart Patterns?
• Directly derived from Price only
• Patterns are easily identified
• First thing people look at and most commonly used
• Basic stuff works the most often
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
CHART
CONSTRUCTION SUPPORT &
RESISTANCE
TRENDLINES &
CHANNELS
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Chart Patterns on higher time frames ARE MORE ACCURATE
Triangles
CHART
CONSTRUCTION SUPPORT &
RESISTANCE
TRENDLINES &
CHANNELS
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Ascending Triangle
CHRT TYPES CONTINUATION
PATTERNS Q & A INTRODUCTION
• Formed in an uptrend
• Resistance and higher lows
• At least 2 points each
• Volume decreases during
consolidation and picks up during
the break out
• Break out around 2/3 to 3/4 of apex
APPLICATION
Trading Strategy: Ascending Triangle
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Descending Triangle
• Formed in an downtrend
• Support and lower highs
• At least 2 points each
• Volume decreases during
consolidation and picks up during
the break out
• Break out around 2/3 to 3/4 of apex
CHRT TYPES CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Trading Strategy: Descending Triangle
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Symmetrical Triangle
CHRT TYPES CONTINUATION
PATTERNS Q & A INTRODUCTION
• Formed in an uptrend or downtrend
• Lower highs and higher lows
• At least 2 points each
• Volume decreases during
consolidation and picks up during
the break out
• Break out around 2/3 to 3/4 of apex
APPLICATION
Trading Strategy: Symmetrical Triangle
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Flags
CHART
CONSTRUCTION SUPPORT &
RESISTANCE
TRENDLINES &
CHANNELS
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Bullish Flag
• Flagpole (sharp move)
• Flag (brief pause against
current trend)
• Should not retrace to more
than 50% of flagpole
• Volume decreases during
consolidation and picks up
during the break out
CHRT TYPES CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Trading Strategy: Bullish Flag
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Bearish Flag
• Flagpole (sharp move)
• Flag (brief pause against
current trend)
• Should not retrace to more
than 50% of flagpole
• Volume decreases during
consolidation and picks up
during the break out
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Trading Strategy: Bearish Flag
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Rising Wedges & Falling Wedges
CHART
CONSTRUCTION SUPPORT &
RESISTANCE
TRENDLINES &
CHANNELS
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Rising Wedge
• Formed in downtrend
• Higher lows formed faster than higher
highs
• Contraction of the range indicates that
the uptrend is loosing steam
• Volume decreases during
consolidation and picks up during the
break out
• Break out around 2/3 to 3/4 of apex
CHRT TYPES CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Trading Strategy: Rising Wedge
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES
PIVOT
POINTS
S
REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Falling Wedge
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES REVERSAL
PATTERNS
CONTINUATION
PATTERNS Q & A INTRODUCTION
• Formed in uptrend
• Lower highs formed faster than lower
lows
• Contraction of the range indicates that
the downtrend is loosing steam
• Volume decreases during
consolidation and picks up during the
break out
• Break out around 2/3 to 3/4 of apex
APPLICATION
Trading Strategy: Falling Wedge
CHART
CONSTRUCTION SUPPORT &
RESISTANCE CHART TYPES REVERSAL
PATTERNS Q & A INTRODUCTION CONTINUATION
PATTERNS APPLICATION
Overview: Chart Patterns (Reversal + Continuation)
CONTINUATION
PATTERNS Q & A INTRODUCTION
Chart Pattern Forms During Type of Signal Next Move
Double Top Uptrend Reversal Down
Double Bottom Downtrend Reversal Up
Head and Shoulders Uptrend Reversal Down
Inverse Head and Shoulders
Downtrend Reversal Up
Rising Wedge Downtrend Continuation Down
Rising Wedge Uptrend Reversal Down
Falling Wedge Uptrend Continuation Up
Falling Wedge Downtrend Reversal Up
Bullish Flag Uptrend Continuation Up
Bearish Flag Downtrend Continuation Down
APPLICATION
Other Continuation Patterns?
CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
CHART TYPES INTRODUCTION INTRODUCTION CONTINUATION
PATTERNS Q & A INTRODUCTION
So what is this Chart Pattern?
APPLICATION
CHART TYPES INTRODUCTION INTRODUCTION CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
CHART TYPES INTRODUCTION INTRODUCTION CONTINUATION
PATTERNS Q & A INTRODUCTION
Never try to interpret any pattern when there is NOTHING
APPLICATION
Application
CHART TYPES INTRODUCTION INTRODUCTION CONTINUATION
PATTERNS Q & A INTRODUCTION APPLICATION
Q & A INTRODUCTION APPLICATION CONTINUATION
PATTERNS
Q & A INTRODUCTION APPLICATION CONTINUATION
PATTERNS
Q & A INTRODUCTION APPLICATION CONTINUATION
PATTERNS
FM & BC MODEL TECHNICAL
ANALYSIS DOW THEORY Q & A INTRODUCTION
SUMMARY
• Continuation patterns signal that the
precedent trend is going to continue
• If formed in uptrend, price would rise
• If formed in downtrend, price would fall
• Practice and more practice!
Q & A INTRODUCTION CONTINUATION
PATTERNS APPLICATION
Q & A
INTRODUCTION INTRODUCTION Q & A INTRODUCTION CONTINUATION
PATTERNS APPLICATION
THANK YOU
FM & BC MODEL TECHNICAL
ANALYSIS DOW THEORY Q & A INTRODUCTION Q & A INTRODUCTION CONTINUATION
PATTERNS APPLICATION
References
• http://www.babypips.com
• http://www.stockcharts.com
• http://www.stock-trading-infocentre.com
FM & BC MODEL TECHNICAL
ANALYSIS DOW THEORY Q & A INTRODUCTION Q & A INTRODUCTION CONTINUATION
PATTERNS APPLICATION
