5. Continuation Patterns

Question 1

What is a continuation pattern?

Answer 1

Price movements that occur during trends, they indicate that a trend has to go through a consilidation period to create new momentum, but is likely to continue in its previous direction once the consolidation is complete

Question 2

How do continuation patterns happen in a bullish trend?

Answer 2

In a bullish trend all traders illing to buy have bought and there currently not enough demand to let prices rise any further

Question 3

How do continuation patterns happen in a bearish trend?

Answer 3

In a bearish trend all traders willing to sell have sold, and there is currently not enough supply to let prices fall any further

Question 4

How many different types of Triangle patterns are there?

Answer 4

1. Ascending Triangle
2. Descending Triangle
3. Symetrical Triangle

Question 5

What is this pattern called?

Answer 5

Descending Triangle

Question 6

What is this pattern called?

Answer 6

Ascending Triangle

Question 7

How do triangle formations work?

Answer 7

The price is contained between the resistance or support level and the trend line, the resistance/support level will remain constant while the trend line will either rise or fall, depending on whether the market is currently in a bullish/bearish trend

Question 8

How do you play triangle patterns?

Answer 8

Eventually the resistance/support, trend line will meet, when this happens or shortly before it happens, one of the two containing elements has to be broken, which one is broken first determines the markets future direction

Question 9

What is the most exact price formation strategy?

Answer 9

Flag Pattern

Question 10

What pattern is this?

Answer 10

Flag Pattern

Question 11

In a bullish trend what direction will a flag move?

Answer 11

In a bearish direction

Question 12

In a bearish trend what direction will a flag move?

Answer 12

In a bullish direction

Question 13

What happens when a flag is completed?

Answer 13

You can expect prices to continue moving at roughly the same rate for roughly the same distance as they did before the flag was created

Question 14

When is it most common for Pennant Patterns to occur?

Answer 14

after a steep bullish/bearish trend

Question 15

What is the most significant characteristic of a pennant pattern?

Answer 15

A continuously narrowing trading ranges

Question 16

What usually happens when the resistance/support levels meet during a pennant pattern?

Answer 16

When the pennant is completed prices are likely to break out to continue the previous trend

Question 17

What is the difference between the flag and the pennant?

Answer 17

The pennants two approaching lines allow for a relatively safe prediction on when the pennant will end, pennants cannot go once both lines meet. The glag is formed by two parallel lines

Question 18

What is a rectangle pattern?

Answer 18

A rectangle occurs when an uptrend hits a resistance line or when a downtrend hits a support level, the trend has to overcome the resistance/support before it can continue its original direction

Question 19

What makes up a rectangle pattern?

Answer 19

In order to generate enough bullish/bearish energy to break through a resistance/support level, the market will enter a phase of sideways movement known as lateral consolidation

Question 20

How do rectangle patterns work?

Answer 20

The asset will be trapped between resistance/support, and eventually break out of the rectangle pattern, it is most likely to return to the current market trend