Projecting price ranges from continuation and reversal patterns

As you have already learned the price ranges, continuation, and reversal patterns, this chapter will not be difficult for you. You have to bring all these three factors together. However, we’ll help you understand this chapter by analyzing it even more profound.

Introduction to understanding the continuation and reversal patterns

Traders should be updated with the trend changes because it is an essential factor that can’t be avoided. If you are looking for a better opportunity, it is necessary to be considerate of the trend changes. These changes have a significant impact on market moves.

However, if traders aren’t attentive, they will not be able to spot trends until they are gone. In this course, you will learn the patterns that help analyze the trend. Also, you will understand when the trend is going against you. Even though reversal patterns aren’t often, you need to be cautious about them if you don’t want to lose your account.

Famous patterns in trading

Most price patterns start with a bundle of candles. The continuum is when you can find patterns that go over months, weeks, or days. Japanese candlesticks or price action analysis are associated with patterns that are short-term. Before you use them, you should learn in-depth.

Continuation

These are for the discretionary traders who are interested in trend. If you want to know these use these patterns in trading, you need to have patience and knowledge.

Triangles

Even though these patterns are hectic to act upon, once they are utilized, they will be beneficial. You need to learn the types of triangles and the issues that you will face before trading these.

Sideways Consolidation

This doesn’t often happen, even though they are simple to understand. You might encounter an extreme price range or new high that will lead to fresh relative low that will be after a few days. Due to this, you need to consider the factors that we discussed in the price range chapter and utilize them when trading. It would help if you were mindful of expiry and trading opportunities.

Double Top

These are more like patterns, such as patterns and shoulders. However, the double top is a popular pattern preferred by traders. When it is a double top, you will be benefited better, but these are rare events. However, it is better to be cautious when dealing with them.

Japanese Candlesticks

You can use these patterns in trading without combining them with anything else. But you can consider trend line or moving average if you want to combine them with something. If you use the Japanese candlesticks, the results will be extremely effective.

Flag

You can find these patterns easily and also they are famous. These patterns help you in understanding crowd psychology.

How to handle Continuation Patterns successfully?

If you think about reversal patterns, you will realize that there are some logics. But when it is price action, it truly has a direct connection to price action. If a trader knows patterns and price action, creating a plan to trade will not be a big deal. Once the procedure is ready, projecting price ranges from different patterns will be easier. Moreover, if you utilize patterns to understand the trading opportunities, you wouldn’t need other methods.  

However, there is something you need to know about the continuation pattern. Of course, we have discussed a lot about it in one of the chapters, which is entirely about the continuation pattern. Yet, it would be best if you remembered you can’t always rely on it. For example, even if the pattern appears, there can be trend reversals. Also, you might encounter false breakouts over and over. Mostly, rectangles are prone to false

breakouts because of easy visibility and popularity.

Finally, you can’t see what another trader sees in the pattern. They are likely to be subjective. Some traders might define patterns differently than you do. Of course, this cannot be considered a negative factor. It shows that traders look at the market in different ways. However, if you want to make excellent profits in trading, you need to have a lot of patience and practice. Along with that, you must have skills and a plan.

Wrapping up

If you have been doubtful about trading, you need to learn it. You must essentially know what reversal, continuation, and price ranges are. These factors will help you make more profit while reducing risks if you know to utilize them accordingly.

However, as a beginner, you must begin every new strategy or technique on a demo account. A demo account helps you learn without making you lose real money. To become a pro trader in trading, practice is essential as much as learning is! Therefore, treat both the factors as prominent factors when beginning your trading journey. Success isn’t impossible; if you lay the path perfectly!