Continuation Trading Patterns

When these continuation stock indices trading patterns are formed they confirm that the current indices trend is going to continue heading in same direction.

These patterns are used by stock indices traders to identify half way points of the trend, this is because they form at halfway point of a trend.

There are four types:

• Ascending triangle
• Descending triangle
• Bull flag/pennant
• Bear flag/pennant

Ascending Triangle

The ascending triangle is formed in an up indices trend & it shows that upwards direction of the market is going to continue.

It shows that there is a resistance level that the buyers keep pushing each time moving it higher, and once it breaks stock indices price will continue moving upward.

Overhead resistance temporarily prevents the stock indices trading market from advancing higher, while the rising indices trend line beneath the pattern signals that buyers are still present. An upside penetration of the upper line is a technical buy stock indices signal for a market breaking out from an ascending triangle.

Found within a Indices upward indices trend, the ascending triangle forms as a consolidation period within the up indices trend and indicates upside continuation will follow.

The market formed an ascending triangle during its up indices trend which led to upside continuation. Buy point is when stock indices price clears the upper sloping line & the stock indices market continues moving upward.

Descending Triangle

The descending triangle is formed in a down indices trend and it shows that the downwards direction of stock indices price movement is going to continue.

It shows that there is a support level that the sellers keep pushing each time moving it lower, and once it breaks stock indices price will continue to move downwards.

Support temporarily prevents the stock indices trading market from declining, while the descending sloping line above pattern signals that sellers are still present. A downside penetration of the lower line is a technical sell stock index signal for a market breaking downwards from a descending triangle, & this indicates selling will follow.

Found within a Indices downward indices trend, the descending triangle forms as a consolidation period within the down indices trend & indicates downside continuation will follow.

Market formed a descending triangle during its down indices trend which led to further selling and continuation of the downwards indices trend. The technical sell stock indices signal is when stock indices price breaks-out the lower horizontal sloping line as selling resumes to push the stock indices trading market lower.

Bull Flag/Pennant

This indices pattern forms what looks like a rectangle. The rectangle is formed by two parallel lines that act as support and resistance for the stock indices price until the stock indices price breaks out. In general, the flag will not be formed perfectly flat but it will be formed sloping.

The bull flag is found within a Indices upward indices trend. In this continuation pattern where the stock indices trading market retraces slightly, it is therefore a slight retracement with narrow stock indices price action that has a slight downwards tilt. The technical buy point is when stock indices price penetrates the upper line of the flag. The flag portion has highs and lows which can be connected by small lines which are parallel, giving it what looks like a small channel.

The pennant occurs at halfway point of a bullish upward indices trend and after a break out a similar move equivalent to the height of the flagpole is expected.

The bull pennant above was just a resting period as the stock indices trading market gathered strength to break out and move higher. The continuation signal was confirmed as the upper line was broken to the up-side.

Bear Flag/Pennant

This flag is found in a Indices downward indices trend. The bear flag is a continuation pattern where the stock indices price retraces slightly with a narrow stock indices price action that has a slight upward tilt. The technical sell point is when stock indices price penetrates the lower line of the inverted flag. The pennant portion has highs and lows which can be connected by small lines which are parallel, giving it what looks like a small channel.

The bear pennant above was just a resting period for the stock indices market prior to more selling. The continuation signal was completed as the lower line was broken to the down-side.