There are two broad types of chart patterns — reversals and continuation. In this video, we will look at the continuation pattern. Why do we call them continuation chart patterns? Because they continue an overall long-term trend in the price. In the case of an ascending triangle, the first key feature here is a pre-existing uptrend. This trend is then interrupted by the pattern breaking out into. The trend is not reversed and it is a continuation of the existing trend.
In the case of a descending triangle, similarly, first element here is the pre-existing downtrend, that is interrupted by the pattern breaking out into a continuation in the trend. We could call this the base, the distance between the horizontal resistance line and the lowest point on the local support line here. In the case of the ascending triangle that support is not going to be horizontal, it is going to be upward sloping. The intersection point is called the apex or the cradle.
In the case of a descending triangle, we have a horizontal support line, met by a downward sloping resistance line. New investors are stepping in to replace current investors that want to exit the financial asset. In the case of a symmetric triangle, we have both support and resistance lines as non-horizontal, and converging at the apex. The rectangle patterns are also continuation patterns. We have bullish rectangle in case of an uptrend and bearish rectangle pattern in case of a downtrend.
Flags are also rectangles, except that the local resistance is parallel to the local support, but they are not going to be flat. It is a continuation of an existing trend, but the pattern is temporarily headed in the other direction. Pennants are similar to triangles, except that they are short-term in duration. They are on a daily price action, they are going to be within the week. So, short-term versions of the triangles.
© Prabhu for Forex Videos, 2018. |
Permalink |
No comment |
Add to
del.icio.us
Post tags: chart pattern, Forex video
Feed enhanced by Better Feed from Ozh
Disclaimer: Please note all prices are for information only, they should not be relied upon for accuracy or trading. All prices quotes are based on CFD prices and are similar though not always identical to real exchange prices. STOCKTRKR or anybody connected with STOCKTRKR will not accept any liability for loss or damage arising from use of any information/commentary/charts or articles which is provided 'as is' for educational purposes only, nothing contained on this website should be considered as investment advice - please seek proper investment advice from registered financial broker or institution if you wish to trade on global markets and ensure you are familiar with the risks.
