Continuation Patterns In The Stock MarketWhen there is a rapid price movement the stock market needs time to absorb instability generated by that trend’s momentum and this causes both volume and price rate of change to drop sharply.When patterns mature through the passage of time, there is often a resolution, through either · Continuation of the trend or · Reversal of the trend Traders often look at the body of evidence in price and volume when determining whether a breakout from a consolidating pattern will support a continuation of the trend that lead into the pattern or whether a reversal of the trend will occur. The repetition of indecision patterns occurs often when looking at the financial markets and can be useful if resolution to the pattern can be quickly identified. What It MeansContinuation refers to the resumption of a trend after a consolidating or pattern of indecision. When looking at the various patterns and formations that can occur on price graphs, patterns are often unreliable as to whether the pattern will ultimately point to a continuation of the trend or a reversal of price trend. Generally, indecision or a lack of enthusiasm, results in price patterns that interrupt the trend in prices in the stock market for a short period.A continuation pattern implies that the previous trend will resume when the pattern is complete. After an advance, a Rectangle continuation pattern marks a consolidation period. The chart suggests that after a consolidation in the mid-2000, continuation of the trend occurs. A break above the Rectangle's upper resistance line indicates that the pattern is complete and the prior advance should resume. Day-Trading-Strategy .com, P.O. Box 89029, Houston Texas, 77289 info@Day-Trading-Strategy.com |