Today we are going to see the detail information of continuation chart pattern from this article. Some people say that hedge chart patterns are not 100% accurate. But, you also know that no technique is 100% accurate. But you know, if it doesn’t work 60% to 70% then your stop loss will hit. You as a trader have a rick to reward ratio. If you want to have a professional career in any field, it is necessary to have deep and proper knowledge in that field.
We have seen in the previous reversal chart pattern that if the reversal chart pattern is found in up trend or down trend in the stock market, the trend of the market changes from that point. That is, when the market is bullish and if a reversal chart pattern is found at that point, the market changes trend and converts into a down trend at that point. Continuation chart pattern signals indicate that if the market continues in an up trend, even if the chart pattern appears, the market continues in the up trend and falls further if it is in a down trend. This shows a continuation chart pattern. After this, there are neutral chart patterns which we are going to know in the next article.
What is continuation chart pattern?
The shape of continuation chart pattern is similar to reversal chart pattern. A reversal chart pattern is found when the market is in a down trend. After that market trend can change by reversing from support or resistance, after that market position goes into up trend. Similarly, the same condition happens when the market is in a down up trend. But in continuation chart pattern, market continues in down trend and this pattern is found. Market may fall further from resistance or support. In this, the market trend continues.
How do you identify continuation chart pattern?
It is very difficult to identify chart pattern beginners in the market. Those who have market experience and those who are experts can understand the chart pattern immediately. A few hundred continuation chart patterns are the same as reverse charts. So it becomes confusing to know the difference between them. This causes loss of people. Other technical analysis and indicator related things should be known while identifying chart pattern. When there is a chart pattern in the market. After breaking the support or resistance of the market, take a position in the market based on the volume and market ratio. With this strategy you can book good profit using chart pattern.
Types of Continuation Chart Patterns.
1) Bullish Rectangle Continuation Chart Patterns.
Bullish rectangle is a chart pattern when the market is in an uptrend. Appears at that time. In this pattern, the price of the market falls below a certain distance, it is called its resistance, after which it goes back up from the support. After the price goes up, the volume of sellers increases again at the resistance and the price falls back from the resistance. When the price reaches the resistance, it goes back up and breaks the resistance. After breaking and going up, the price can go down to retest and go back up from the resistance.
In chart pattern you will find ‘w’ shape. In this pattern, when the market breaks the resistance, stop loss should be applied to the low of the candle. After that, if another green candle appears, entry should be taken at the high of that candle.
You will see this pattern first in the reversal chart pattern, but it has a market down trend and then reverses in a market up trend.
You can apply trilling stop loss to this. Trilling stop loss means, suppose you set a stop loss at 100 points and the market price is currently at 110 points. Your target in the market is 140 points. If the market price increases to 150, 160, …, 200. Your stop loss will go from 100 points to 110, 120, …, 160. Even if the market falls below the 160 point by mistake, you can still profit.
2) Bearish Rectangle Continuation Chart Patterns.
A bearish rectangle pattern occurs when the market is in a down trend. While the market is in a down trend. After reaching a certain distance, it reverses from support and goes into an up trend. It comes back down from market resistance, after coming down it goes up from market support and comes back down. When the market breaks the resistance, the market is likely to go further down trend. Market you will see in this pattern in ‘M’ shape.
When the market breaks the support line, there is a possibility that the market will come back up for retesting after going down. Stop loss shall be apply to the high of the resistance candle and entry shall be make to the market at the low of that candle. MACD, RSI and Volume shall be analyze while you are entering the market.
3) Bullish Flag Continuation Chart Patterns.
You may be wondering why this pattern is call bullish flag pattern. In the Bullish Flag pattern, the market continues in an up trend and go back into a sideways trend when a Flag shape is form above the chart. The market reverses at certain resistance from up trend and goes into down trend. From support it goes back up and back below the first resistance there is another resistance and from there it goes back down. After coming down, it goes back up from the second support. In this pattern we don’t see resistance and support horizontally, we see them in decline. After the market is in an up trend, it becomes bullish after breaking the resistance.
When the market is bullish, it is likely to come back down to retest. The candle is use when breaking the resistance in the market. A stop loss shall be apply to the low of this candle and if the second candle after this candle is green, the high of that candle should be enter in the market.
4) Bearish Flag Continuation Chart Patterns.
A bearish flag is similarly a bullish flag. In this only flag you see the reverse forming. In this, the shape of the market appears to be in ‘M’ shape in the chart. Resistance and support are see in the incline in this pattern. At this time, if the market breaks the support and goes down, it indicates further down trend from there.
When the market breaks the support and go into a down trend, it can come back into an up trend to retest. At this time, while taking an entry in the market, a stop loss shall be apply to the resistance which is the price at the end. If there is another red candle after the candle which breaks the support of the market, entry shall be take at its low.
5) Bullish Pennant Continuation Chart Patterns.
In a bullish pennant pattern, the market starts in an up trend. At this time, the market meets resistance at a certain distance. After the market converts into a down trend, it meets resistance at a small point, in which the market sideways . Support is in the incline and resistance is in the decline. After this the market breaks the resistance and goes up, at that time it becomes bullish.
While taking entry in the market, the stop loss shall be place at the low of the candle breaking the resistance, and after the entry in the market, if there is a green candle, it shall be take at its high.
6) Bearish Pennant.
The price of the market is in a down trend when this pattern starts. At a certain distance, this price gets support in the market, after which the market converts into an up trend and reverses from resistance. Market sideways appear in pennant structure. When the market breaks the support and goes down, the chances of it becoming bearish are high.
When breaking the resistance in the market, stop loss shall be apply to the high of the candle and entry shall be make to the market at its low. Sometimes the price of the market can come up to retest.
7) Bullish Symmetrical Triangle.
As you have seen this pattern, you must have realized that bullish pennant pattern and Bullish Symmetrical Triangle pattern are the same. But in trading, pennant pattern is find in short term trading and Symmetrical pattern is find in long term i.e. swing trading.
The price continues in an up trend in a bullish symmetrical triangle pattern. In this, when resistance is met, the price falls and when support is reach at a certain point, it go up from there. At this time, a triangle is form in the market and the price gradually decreases in that triangle. At a certain point, the price go up by breaking the resistance of the market.
In this pattern, you should place the entry at the high of the candle breaking the resistance and place the stop loss at the point of the support at the end.
8) Bearish Symmetrical Triangle.
Bearish Symmetrical Triangle chart pattern is form in reverse of bullish pattern. In this pattern, the price of the market starts in a down trend for the first time. After that, the price moves between support and resistance in the shape of a triangle. After some time this price breaks the support, at which time it is likely to fall further. Price may come up to retest at times.
When the market support breaks and comes down, a stop loss shall be apply to the high of that candle. If there is another red candle after that candle, its low shall be enter in the market.
9) Cup And Handle.
The market continues in an up trend in the cup and handle chart pattern. After that, the price of the market reaches the point of resistance and starts falling back. the price moves sideways in u shape. After this, the price starts to move back up from a certain point. Back down slightly from resistance forming a u shape. This pattern is see in the market in cup and handle shape.
In the market, the stop loss resistance shall be place at the low of the break candle. If there is a bullish candle after this candle, its high shall be enter in the market.
10) reverse cup and Handle.
This pattern is see in the reverse cup and handle shape. when the market is in a down trend. If this pattern appears in the market, at that time stope loss shall be apply to the high of the candle that breaks the support. Entry shall be take at the low of that candle in the market.
In this article we learned about the continuation chart pattern, we are creating it with the help of candlestick pattern. You should read the information on this website very carefully. But in this you should be able to recognize this chart pattern in the market, and you should be able to work on it through technical analysis and also you should be able to book profit using it. You may recognize these chart patterns in the market. However, you should know how to enter and exit the market. We are going to give you information about this in the next few articles.