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Bullish Continuation Patterns

A free video tutorial from Corey Halliday
professional trader and educational instructor
Rating: 4.4 out of 5Instructor rating
9 courses
38,035 students
Bullish Continuation Patterns

Lecture description

In this lecture we will introduce you to Bullish Continuation Pattern and discuss Base Patterns and High base patterns.

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02:02:50 of on-demand video • Updated May 2017

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English [Auto]
Secret to winning is constant, consistent management, so we've talked about resistance. Now let's put these into work with patterns. We're going to look at some continuation patterns. We'll start with bases and then branch out from there. Now, as we look at continuation patterns, there's a lot of different types of bullish breakout patterns. The whole idea is to create a picture, a framework to work off of excuse me. The really good thing about technical analysis is that we can quantify our actions. We can quantify it. Well, here is resistance. And here's the breakout point. And here's where our corresponding stop loss should be. And here's how much we can target. We can quantify the numbers and make good risk rewards. So we want to be able to identify these patterns, based patterns where you create relatively equal highs and lows. Cup handles where you create a deeper cup with a more shallow handle, ascending triangles stalling at the same resistance, but rising lows showing that the buyers are pushing higher. But the sellers continue to hold symmetrical triangles, true indecision, what they call a volatility crush, where they compress the volatility down, lower highs and higher lows. We're going to look at each of these patterns. We're going to start with the basis. There's a couple of different types of bases. We're just going to start with the standard, which is more of a sideways pivoting back and forth. So it's like a trading range to just keep bouncing between two price points and there's pivot points, so resistance is up here around 30 to support down there around 30. And it's in that ballpark, right? It's not an exact number, but in that range, that is the sideways base. You can quite clearly see an extreme bullish breakout. Look at the size of that big bullish candle. Look at the acceleration up and through. We have increased volume when it did it. I mean, the characteristics behind that breakout are fantastic. And then you can see the upward results that followed. That's one style of base, this one similar to that, how we pivot back and forth between two price points. That's a form of a base. The next type of base is what we call a high base pattern. The difference between just your typical base and the high base is a high base will usually have candles, the stacked side by side. So instead of going up for three or four days and then pivoting and turning down and having a more pronounced big trading range to create a base, a high base is very narrow and it's just mostly one or two candles stacked next to each other that just kind of base sideways. All these candles are compressed. This one's really drawn out. Usually it'll be maybe five candles, six candles, something like that. You know, you just go sideways, stack them up for a handful of days and then finally break out and accelerate. Hi, base, you can see it's just more kind of sideways day to day price action, not really bounciness, but just all the candles stacked sideways, followed by the breakout. So we call that a high base as opposed to just your typical bashing. You know, sideways, choppy price action, high base patterns are one of the most bullish considerations after a strong run. So if you run higher and then all the sellers are able to muster, if they can get the stock to go sideways for five or six days, it tells you that stock just wants to go higher. Still, you see this high base formation and you know, it's a bullish candidate for a nice upside breakout. So watch for those high bases you'll see here. I would argue the first one I would call more of just your typical base, because you have more of kind of the pivoting back and forth. Right, the back and forth price action, but this one, just a high base with sideways candles and then the breakout either way, a couple of basing patterns that were certainly reasonable for buy points. And where do we buy? We buy when we clear resistance. We'll talk about that two weeks from now when we talk about trading triggers and stop loss placement and all of that. That's basically your entry point is on the other side of resistance. So basing patterns remember more of the back and forth as opposed to the high base, just a nice narrow range. Essentially, you're dragging lines between the top and the bottom end of the range.