Continuation Patterns

When these continuation chart patterns are formed they confirm that the current stock 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 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, & once it breaks price will continue moving upwards.

Overhead resistance temporarily prevents the trading market from advancing higher, while the rising stock trend-line beneath the pattern setup 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 trend & demonstrates upside continuation will follow.

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

Descending Triangle

The descending triangle is formed in a down stock trend & it displays that the downward direction of price movement is going to continue.

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

The support temporarily prevents the stock 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, & this shows selling will follow.

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

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

Bull Flag/Pennant

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

The bull flag is found within a Stock Indices Trading upwards trend. In this continuation pattern where the stock market retraces slightly, it's therefore a slight retracement with narrow price action which has a slight downwards tilt. The technical buy point is when 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 stock trend & after a break-out a similar move equal to the height of the flag pole is expected.

The bull pennant above was just a resting period as the stock market gathered strength to break out & 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 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 market prior to more selling. The continuation signal was completed as the lower line was broken to the down-side.