Today we have a long set up to share on the Stock Market. Here you will have a full explanation of it.
a) What is a continuation pattern? A continuation pattern is a structure that comes after a bullish or bearish movement. The main characteristic is that is a sideways period that tends to have 3 forms a) Zig-Zag (also known as a flag, pennants), Triangles ( composed by an ABCDE), and Flats (literally are rectangles structures)
b) When we spot a corrective structure (in an appropriate context), we can project the coming movement using Fibonacci Extensions
c) Here, we can see 2 corrective structures on the same chart. The one we are interested in right now is the current pennant pattern
d) If we have a breakout of the structure above B, we expect a continuation movement towards the 2nd Fibonacci Extension
e) When trading these structures, Orders can be set above B (if we are in a bullish scenario). The stop should be set below C, and the Target can be set using Fibonacci Extensions as we explained before
f) Remember that another key aspect of trading is Risk Management. If you are about to trade, define a specific risk according to your account. Trade safe and protect your capital!