Continuation Patterns Work – And Here's Why

I learned about continuation patterns many years ago and it was an expensive lesson. Before I share that with you, let me explain to you what a continuation pattern is and what it does.

A continuation pattern is one where you have a move out of the base, which is called a breakout, and the market moves up rather sharply and then stops and move sideways. The reverse is true when a market breaks down from a top and then forms a continuation pattern to the downside. Traders in a bear market will either sell short or buy puts looking for the market to move lower.

Well, many years ago I was one of those rookie traders and it was a lesson that I've never forgotten to this day - don't try to pick tops or bottoms on continuation patterns.

Talking about a classic continuation pattern, the stock of Under Armour Inc. (NYSE:UA) broke out of a continuation pattern today. UA now looks poised to move much higher. I've talked about this stock before and pointed out that it was a continuation pattern to the upside in several of my previous videos, I hope you were able to catch the move. Certainly, the Trade Triangle technology did not miss this move and is sitting with some nice profits at the moment.

What has your experience been with continuation patterns? Do you trade them, or were you unaware of this recurring phenomenon? Either way, I would like to hear what you think. Leave your comments below this post.

Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

3 thoughts on “Continuation Patterns Work – And Here's Why

  1. Thank you Adam for the comment.
    I would like to add that HIgher Highs / Higher Lows & Lower Lows/Lower Highs are excellent continuation Patterns that provide Low entry with minimum risk if entered at the Higher Low for Longs & Lower HIghs for Shorts. These formations form Pivot levels and it is important to know how to read them and enter a trade using them. Entry is made up of two formations: Setups & Triggers. Have been trading this concept for seven years with great success. There is obviously much more to this but I just wanted to share this concept and piggy back it on top of your discussion.
    All the best....Daniel

  2. Thank you Adam.

    I did successfully trade with this pattern on ziptel (ASX:ZIP)
    Classic consolidation November to March then the continuation breakout which began early April.
    Looks like it is now setting up for another breakout either down or up. Could you have a look and give your expert opinion?

    best regards

    Gary

  3. I am grateful for your information on continuation patterns. In the past, I have only briefly reviewed this pattern and have not followed it as it should be followed. Thanks to your information, I will delve further into this interesting technique.

    Sincerely,

    Eleanor

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