Three continuation patterns you have to know about.

Today we would be talking about continuation pattern.

These three patterns usually occur in strong trends and are an excellent entry opportunity for a trend following strategy. They appear on all timeframes and are an excellent trading opportunity.

Flag Pattern

A flag is a continuation pattern and can occur in a downtrend as a bearish flag and in an uptrend as a bullish flag. The bullish flag pattern is characterized by a steep rally (flagpole) after a resistance level was broken. This steep rally is then followed by a very brief consolidation pattern. This consolidation in the form of a so called “flag” is usually against the previous trend. If this flag pattern is broken to the upside another rise follows with usually the same length as the first one. The same logic applies for a bearish flag pattern.

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Wedge Pattern

The wedge pattern can occur as a bullish or a bearish wedge pattern. If a bullish consolidation pattern in form of a wedge is broken to the upside we can expect a strong rally to follow. Similar to the flag the wedge pattern consolidation is contrary to the short term trend.

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Symmetrical Triangle Pattern

Similar to the flag pattern and the wedge pattern we witness a strong trend ahead of this consolidation pattern. During the consolidation we see a sequence lower highs and higher lows (in the case of the bullish symmetrical triangle). A breakout in the direction of the short term trend usually triggers follow through buying (or selling in the case of a downtrend).

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