Continuation Setup Patterns

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

These patterns are used by stock traders to identify half way points of the trend, this is because they form at 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 indices trend & it shows that 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.

Overhead resistance temporarily prevents the trading market from advancing higher, while the rising trendline 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 Indices upward trend, the ascending triangle forms as a consolidation period within the up indices trend and indicates upside continuation will follow.

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

Descending Triangle

The descending triangle is formed in a down trend and it shows that the downwards 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 down-wards.

Support temporarily prevents the trading market from declining, while the descending sloping line above pattern signals that sellers are still present. A downside penetration of the lower line is a technical sell signal for a market breaking downwards from a descending triangle, & this demonstrates selling will follow.

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

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

Bull Flag/Pennant

This 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. In general, the flag will not be formed perfectly flat but it will be formed sloping.

The bull flag is found within a Indices upward trend. In this continuation pattern where the trading market retraces slightly, it's therefore a slight retracement with narrow price action that has a slight downwards tilt. The technical buy point is when stock 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 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 trading market gathered strength to break out & move higher. The continuation signal was confirmed as the upper line was broken to the up-side.

Bear Flag/Pennant

This flag is found in a Indices downward trend. The bear flag is a continuation pattern where the price retraces slightly with a narrow price action that has a slight upward tilt. The technical sell point is when stock 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 the lower line was broken to the down-side.