Thursday, November 13, 2008

Rectangle Continuation Pattern

Bearish Rectangle Continuation Pattern

Of course, Technical Analysis can't predict the future. However, it does help to bring into focus a number of potential future outcomes in any trading market. Right now, many watchers are drawn to the view that the major market indices are "bottoming". That brings us to the "Bearish Rectangle Continuation Pattern". This pattern occurs when an asset has a steep decline and then stabilizes in a range, as selling pressure wanes and comes into relative equilibrium with the buying of bottom fishers, who either can't believe the market can go any lower or who are simply, and correctly, recognizing that the particular down wave is over done, and as such a bounce is at hand. After trading sideways in a range, the price will "breakdown" from the bottom of the consolidation range, and continue lower for another leg down.

So? What's the big deal? The problem is that a pattern always appears to be a bottom, because the lows hold for a number of retests. This could be what we are facing right now. This becomes more likely because prior to the current sideways range, we had a massive down move. These are called continuation patterns because after consolidating sideways in a rectangle range, prices continue in the direction they were moving before entering that consolidation phase...

We shall see!

Source: Chart School
Rectangle Continuation Patterns

November 13, 2008

Rectangle Continuation Patter
November 13, 2008

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