Continuation Patterns
Continuation Patterns used in Japanese Candlestick Trading
When using Japanese Candlesticks as your leading technical indicators , you are alerted to possible price movements. Each candlestick allows you to detect price action that is indicative of either buying or selling pressure. There are 12 major patterns that investors use with the concept of reversal patterns in addition to bullish and bearish patterns. Once you learn these 12 major patterns, you can then move onto the secondary candlestick patterns . These secondary signals do not appear as frequently as the major signals however they provide additional opportunities needed when making important trading decisions.
Continuation patterns suggest that the market will maintain a trend that has already been established. These continuation patterns help traders to differentiate between a price action that is in full reversal and those patterns that are instead taking a pause. In other words, most candlestick patterns are reversal patterns, but there are certain trends that represent times of rest. These patterns help the trader with the decision making process, even if the decision is to perform no action at all.
Used in technical analysis , Japanese candlesticks are gaining in popularity among individual traders. This is due mainly to the reason that they are much easier to learn and to interpret than bar charts. The candlestick chart is 3-dimensional which makes it easier to the see the relationship between the open and the close, and the high and the low. On candlestick charts, the body of the candle itself if thicker than the shadow, which also makes it easier to see how the close price relates to the open price, as opposed to bar charts.
It is important to note that these patterns must be viewed within the context of the prior activity in order to be effective and they may have different meanings depending upon where they occur within the context of prior trends and formations.
There are a number of continuation patterns that we will review in future postings. Here we will explain the description of the patterns, the criteria, and the psychology behind each pattern. Please continue to revisit the Candlestick patterns section of this site to learn more. Please also learn how you can combine these with your favorite technical analysis indicators, such as the moving average and stochastics , so that you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or exchange traded funds .
Continue your Japanese candlesticks education and learn about the continuation patterns below!
Upside Tasuki Gap
Downside Tasuki Gap
On Neck Line
Three Line Strike
Rising Three Method
Falling Three Method
Mat Hold
Candlestick Neck Line Patterns
Thrusting Pattern
Upside Gap Three Method
Separating Lines
