Continuation Chart Patterns

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

These patterns are used by traders to identify halfway points of the trend, this is because they form at the 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 stock indices trend and it shows that the 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 index price will continue moving upwards.

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

Found within a Stock Indices Trading upwards trend, the ascending triangle forms as a consolidation period within the up stock indices trend & indicates upside continuation will follow.

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

Descending Triangle

The descending triangle is formed in a down stock indices trend & it shows that the downwards direction of stock index 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 index price will continue moving downward.

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

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

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

Bull Flag/Pennant

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

The bull flag is found within a Stock Indices Trading upwards stock index trend. In this continuation pattern where the stock indices market retraces slightly, it is therefore a slight retracement with narrow stock index price action which has a slight downward tilt. The technical buy point is when price penetrates the upper line of the flag. The flag portion has highs & 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 stock indices trend & 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 market gathered strength to break out and move higher. The continuation trading signal was confirmed as the upper line was broken to the upside.

Bear Flag/Pennant

This flag is found in a Stock Indices Trading downwards stock index trend. The bear flag is a continuation pattern where the price retraces slightly with a narrow price action which has a slight upward tilt. The technical sell point is when 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.