Hi fellows, This is an example for patterns identification in a market many traders struggle to identify patterns in a particular trending market for Trend Continuation Trade Setups. This is a perfect example for Pattern Identification.
1. IMPULSE ( First Entry )
In this chart, We have IMPULSE from top( that means market is setting up for a ) If you read that IMPULSE on time you can catch the wave right from the top for higher potential. We call this entry based on Trend Reversal Point. There are lot of names which you can use for that LIKE ( Potential Trend Reversal Point, Zone, Support and Resistant E.T.C)
2. TREND CONTINUATION PATTERN ( Correction, Consolidation or Accumulation )
In this chart, From Top after the impulse we have a lower degree channel which was giving an indication that price is not going to continue until it finish the TREND CONTINUATION PATTERN FORMATION or Flag.
3. FLAG ( Trend Continuation Pattern ) ( Second Entry )
Once Flag completed, there is an other opportunity for sell which we called Entry based on TREND CONTINUATION PATTERNS. Here you can use Oscillators, Moving averages or any other indicator which can give you an indication that TREND CONTINUATION PATTERN is going to finish or Correction, Consolidation, Accumulation is going to finish for the next impulse or for the next wave.
Once you understand that Pattern is about to end and Next wave is about to start you can sell Before the Breakout or after the Breakout.
We call them:
1. Entry before the breakout:
2. Entry After the breakout:
We prefer to enter in the market before the breakout for better risk reward ratio.
4. Next IMPULSE
Once next wave or impulse appears and price again forms Trend Continuation Patterns you can repeat the same steps which you have done on the flag. But this time you might not see the flag may be you can see the Triangle as you can see in the example. Until price do not forms IMPULSE from the bottom and keep forming the trend continuation pattern you can keep adding more positions with reasonable risk. Please Keep In mind one thing, Once a wave already moved a lot adding more position without understanding the bigger pattern gonna be dangerous so always add more positions with care because buying on top and selling on bottom is dangerous so you need to understand the bigger picture so that you can understand whats going on bigger picture and where the high potential wave is. Always add more positions there where you see that, that particular wave has a huge potential and will not reverse any time soon. For that you have to analyse from bigger time frame to lower time frame so that you can pick that asset or pair where you will see that in longer term that pair will remain in a trending market not in sideways market.
5. Triangle (Trend Continuation Pattern ) ( Third Entry )
Repeat same steps which you have done on the flag
6. Flat channel ( Trend Continuation Pattern ) ( Fourth Entry )
Repeat same steps which you have done on the flag and Triangle
Once you will see the impulse from the bottom you can read that impulse and momentum on lower time frame. This is time to take the profit off from the market and time to buy for the change in trend.
Always remember. Patterns form with in the patterns so one pattern will show you the continuation and other one will show you the reversal so read them correctly.
In this chart, You can see wave is running with in the higher degree and that channel is a trend reversal channel and in longer term price will change the direction to the upside and lower degree patterns are forming within that higher degree channel for the previous trend continuation and we were trading in that higher degree pattern so always remember that at some point that higher degree pattern will change the direction of the market