Chart Patterns – Continuation

Chart Patterns – Continuation

Ascending Triangle – Bullish Continuation Pattern:

The Ascending Triangle is one of the most reliable bullish continuation or accumulation patterns. It is characterized by a series of higher lows failing at a flat top – this means it is a ‘terminal’ pattern – eventually price will have to stop carving higher lows, or more often than not, the top will have to break.

education_post_img34

Just like the reversal patterns discussed in the previous section, the buy signal occurs when the top breaks and the pattern is confirmed.

Descending Triangle – Bearish Continuation Pattern:
The Descending Triangle on the other hand, is a very reliable bearish continuation pattern. The pattern is characterized by a series of lower highs meeting a flat bottom.

education_post_img35

Traders will enter short when the flat bottom is taken out. As we discussed in the Trend Trading section, price can decline quite quickly in a bear market – these patterns often yield impressive moves lower.

Bull Flag – Bullish Continuation Pattern:
Bull Flags or Pennants are an extremely reliable bullish continuation pattern. They are deceptive to the novice trader as price is temporarily trending down, but at a relatively shallow pace. Bull flags are characterized by a series of parallel lower highs and lower lows within a dominant uptrend:

education_post_img36

A buy signal is triggered when the upper parallel is breached.

Bear Flag – Bearish Continuation Pattern:
The last continuation pattern we will look at is the Bear Flag. The opposite of the Bull Flag, characterized by a series of parallel higher lows and higher highs within a dominant down trend:

education_post_img37

Traders will look to enter short once the lower parallel breaks. Just like the Descending Triangle, these patterns can lead to some fierce bearish continuation – in this case, GBPUSD declines over 800 pips in less than a month.

education_post_img38

The Take Away: Chart patterns are often high probability, high reward trades that offer the trade clear entry and stop loss levels. Patterns are confirmed when the relevant line breaks – not before – wait for the breakout.

Again, go back on your MT4 trading platform and see how many of each forex chart pattern you can find.

Fast & Easy Account Opening Start Now!



  • Please enter a valid data!

  • Please enter a valid data!

  • Please enter a valid data!

  • Please enter a valid data!

  • Please enter a valid data!

Vantage International Group Limited is regulated by CIMA.

Important

You may prefer to apply for an account with our Australian Regulated Entity – Vantage Global Prime Pty Ltd.
Vantage Global Prime Pty Ltd – an ASIC regulated entity offers additional regulatory protections and safeguards that will not apply when opening account under our Cayman Islands regulated entity. These safeguards include restricted leverage, negative balance protection, a mandatory 50% margin close out rule, client money protection under ASIC Client Money Reporting Rules 2017 and access to an external dispute resolution body – the Australian Financial Complaints Authority (AFCA). Click here to open an account with Vantage Global Prime Pty Ltd.
Alternatively, you can continue with your current application under our CIMA regulated entity.

CONTINUE