ll of the candle signals we've seen so far have been reversals. In fact, most candle signals are trend reversals. There are, however, a group of candle patterns that are continuation indicators.
CONTINUATION PATTERNS
Fate aids the courageous.
All
of the candle signals we've seen so far have been reversals. In fact, most
candle signals are trend reversals. There are, however, a group of candle
patterns that are continuation indicators. A continuation pattern is one in
which the market should continue the same trend as that in force before the
continuation pattern. For instance, a continuation pattern following a rally
means that the trend remains up and we should expect the rally to remain in
force. (This, however, does not preclude a correction after the continuation
pattern before the rally, hopefully, unfolds.)
As
the Japanese express it, "There are times to buy, times to sell, and times
to rest." Many of these continuation patterns
imply
a time of rest, a breather, before the market resumes its prior trend. The
continuation formations reviewed in this chapter are windows (and patterns
that include windows), the rising and falling three methods, separating lines,
and three white soldiers.