Continue reading...Trend analysis is a complex process that goes beyond trend lines, channel lines and retracements. An important aspect of this type of analysis is the identification of patterns that reinforce trends and of formations that signal the reversal of trends.
Chart formations that show the extension of trends are called continuation patterns. They consist of pauses within trends and they are generated by traders who realize some or all of their profit typically ahead of significant releases of economic data or strong technical level. These behavioral patterns translate into chart formations and tend to look like neutral moves. However, they can either slope against the original trend or, more rarely, slope in the direction of the trend. The consolidations are fairly short ? but not always.
The most important continuation patterns are: flags, pennants, triangles and wedges. Let?s focus on triangles.
Differences between a Pennant and a Triangle
A pennant is trend continuation...
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