Continuation Chart Setups

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

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

Overhead resistance temporarily stops the market from advancing higher, while the rising stocks trend-line beneath the 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 upward trend, the ascending triangle forms as a consolidation period within the up trend and shows 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 the stocks market continues heading up-ward.

Descending Triangle

The descending triangle is formed in a down trend & 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 moving down-ward.

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

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

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 lower horizontal sloping line as selling resumes to push the stocks market lower.

Bull Flag/Pennant

This stocks pattern forms what looks like a rectangle. The rectangle is formed by two parallel lines that act as support and resistance for stocks price until the stocks price breaks out. Generally, the flag will not be formed perfectly flat but this pattern setup will be formed sloping.

The bull flag is found within a upward trend. In this continuation pattern where the stocks market retraces slightly, it is 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, & it looks like a small channel.

The pennant occurs at halfway point of a bullish upwards trend & after a breakout a similar move equal to the height of the flagpole is expected.

The bull pennant above was just a resting period as the stocks market gathered strength to break-out and 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 downward 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, & it looks like a small channel.

The bear pennant above was just a resting period for the stocks market prior to more selling. Continuation signal was completed as lower line was broken to the down-side.