Cracking the Code:
Fun Facts About Continuous Patterns!
When you’re diving into the wild world of trading, Continuous Patterns are like the trusty sidekicks that help you understand where the market might be headed. But, as with any good plot twist, there’s more than meets the eye. So, let’s break down some fun and essential notes to keep in mind about these patterns!
1. The Trend Before the Pattern
For a continuous pattern to even exist, there needs to be a clear trend already in motion, either up or down. No trend, no pattern. Simple as that. It’s like spotting a wave; you need to see where it’s coming from before you ride it.
2. Clear as Day
Patterns need to be clear and obvious. If you find yourself squinting and second-guessing, it’s probably not a pattern worth acting on. The clearer the pattern, the stronger the signal.
3. Up Breaking Volume Must Be High:
When prices break upwards, the volume should be booming. Think of it like a party—when the market is breaking out, everyone’s joining in, and the volume goes through the roof!
4. Falling Prices Don’t Need a Push
On the flip side, when prices break down, the volume doesn’t need to be sky-high. Why? Because prices tend to fall from their own weight. Gravity does the job, and the volume can stay relatively chill.
5. Break That Neckline
For a pattern to be official, it needs to break the neckline. Just like the name tag at a reunion, if it doesn’t show who you are, it doesn’t count!
6. Time in Continuous Is Shorter Than in Reversing:
Continuous patterns tend to play out faster than their reversing cousins. If you’re looking for quick action, continuous patterns are where it’s at. Reversals, on the other hand, like to take their sweet time.
7. Volume Speaks Louder in Reversals
Reversal patterns usually come with a surge in volume. It’s like a dramatic movie scene with all the action and noise. Continuous patterns are more like a steady buildup, with volume staying relatively low.
8. Volume Inside Sideways Movement Is Low:
When the market’s moving sideways, expect the volume to be low. It’s the calm before the storm—nothing too exciting happening just yet, so the volume takes a nap.
Wrapping It Up: The Pattern Puzzle
Understanding continuous patterns can give you a major edge in the trading game. Remember these key points, keep an eye on those trends and volumes, and you’ll be well on your way to mastering the market. Whether it’s a continuous move or a sudden reversal, these patterns have got your back. Happy trading!
Continuation Patterns
