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
Co-Creator, MarketClub