Continuation Patterns

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

These patterns are used by traders to spot halfway points of the market trend, this is because they form at the half way 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 upward.

The overhead resistance temporarily stops the trading market from advancing higher, while the rising trendline 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 Energies Trading upwards trend, the ascending triangle forms as a consolidation period within the up trend and indicates upside continuation will follow.

The market formed an ascending triangle during its up trend which led to upside continuation. The buy point is when price clears the upper sloping line and market continues moving upwards.

Descending Triangle

The descending triangle is formed in a down trend and it shows 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 to move downward.

The support temporarily stops the market from declining, while the descending sloping line above the pattern setup signals that sellers are still present. A down-side penetration of the lower line is a technical sell trading signal for a market breaking down from a descending triangle, & this demonstrates selling will follow.

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

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

Bull Flag/Pennant

This pattern forms what looks like a rectangle. The rectangle is formed by 2 parallel lines that act as support & resistance for the price until the 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 Energies Trading upwards trend. In this continuation pattern where the 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 & 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 trend & after a breakout a similar move equivalent to the height of the flagpole is expected.

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

Bear Flag/Pennant

This flag is found in a Energies 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 market prior to more selling. The continuation signal was completed as lower line was broken to the downside.