Continuation Patterns
Lesson 8 of 108 min5 exercises
Learn · 1/5
Patterns That Say "Keep Going"
Not all patterns signal reversals. These patterns suggest the current trend will continue after a brief pause.
RISING THREE METHODS (Bullish Continuation)
Rising three methods: a big green candle, three small red candles that stay inside its range, then another big green candle to new highs.
Requirements:
1. Big bullish candle
2. 2-4 small bearish candles (stay within first candle's range)
3. Big bullish candle that closes above the first
What it means: Bulls took a breather, then continued.
Signal: Strong bullish continuation.
Nickname: "The Rest Stop"
1. Big bullish candle
2. 2-4 small bearish candles (stay within first candle's range)
3. Big bullish candle that closes above the first
What it means: Bulls took a breather, then continued.
Signal: Strong bullish continuation.
Nickname: "The Rest Stop"
Learn · 2/5
FALLING THREE METHODS (Bearish Continuation)
Falling three methods: a big red candle, three small green candles that stay inside its range, then another big red candle to new lows.
What it means: Bears took a breather, then continued selling.
Signal: Strong bearish continuation.
Signal: Strong bearish continuation.
Learn · 3/5
MAT HOLD
Similar to Rising/Falling Three Methods but:
- The small counter-trend candles can gap
- More flexibility in the number of small candles
- Often has a slight slope to the consolidation
Signal: Strong continuation pattern.
- The small counter-trend candles can gap
- More flexibility in the number of small candles
- Often has a slight slope to the consolidation
Signal: Strong continuation pattern.
SEPARATING LINES
Bullish Separating Lines (in uptrend):
1. Bearish candle
2. Bullish candle that opens at same price as prior open
What it means: Sellers tried overnight, buyers immediately pushed back at open.
Signal: Uptrend continuation.
1. Bearish candle
2. Bullish candle that opens at same price as prior open
What it means: Sellers tried overnight, buyers immediately pushed back at open.
Signal: Uptrend continuation.
Learn · 4/5
ON-NECK / IN-NECK / THRUSTING
These are WEAK continuation patterns in a downtrend:
On-Neck: Green candle closes at the prior low
In-Neck: Green candle closes slightly into prior body
Thrusting: Green candle closes up to midpoint of prior body
All suggest: "Buyers tried but couldn't do much - downtrend continues"
Note: If it closes ABOVE 50%, it becomes a Piercing Line (reversal)!
On-Neck: Green candle closes at the prior low
In-Neck: Green candle closes slightly into prior body
Thrusting: Green candle closes up to midpoint of prior body
All suggest: "Buyers tried but couldn't do much - downtrend continues"
Note: If it closes ABOVE 50%, it becomes a Piercing Line (reversal)!
Tip
Continuation patterns work best when the trend is strong and the "pause" has low volume compared to the trend moves.
Learn · 5/5
Key takeaways
- Rising Three Methods = big green, small reds inside, big green = bullish continuation
- Falling Three Methods = big red, small greens inside, big red = bearish continuation
- On-Neck/In-Neck/Thrusting are weak continuation signals
- Continuation patterns show "the trend is just resting"
Next: 5 quick exercises. Miss one and it comes back at the end.