Continuation Patterns and Pennants in Binary Options Trading

Continuation Patterns and Pennants in Binary Options TradingSeveral of our articles have focused on picking out patterns from analytical charts to help detect where price movement will change or if we think it will remain the same. One of the most important patterns to look for is a continuation pattern; one of the key indicators inside a continuation pattern to indicate the movement will stay the same is a pennant. Let’s talk a little more about these two things.

Before even starting to talk about pennants, one should know the difference between a continuation pattern and a reversing one and be able to understand the outcome to follow aftereach such a pattern. A continuation pattern implies that price is breaking a consolidation area in the same direction as the previous trend. A reversal pattern is simply a pattern that trends in a different direction after it at breaks out of its consolidation area.

Pennants form when a triangular patterns price movement is nearly vertical just after a strong move to the upside (the strong move forms the pole of the pennant and the near vertical move forms the flag of it). A continuation will signal that a bullish trend will continue. So one would be wise to buy only call options after the pennant is seen forming. It is important to remember that price usually travels very fast after the consolidation area of a continuation pattern is broken.

What is nice about a pennant as an identifier is that you only need a measured move to get confirmation of the continuation pattern.

So once you get used to seeing them and using them, pennants are a great tool for helping you spot continuation patterns. Once they are spotted, as we staed before, get ready to buy call options because all indications are the previous upswing in price will continue.

Start trading now by opening a FREE account on one of our recommended brokers.

Recommend Binary Option Brokers:

 BonusMin. DepositMax. Returns   
Optionrobot
100%
$200
91%
GoldRegisterReview
automated-binary-logo-small
100%
$200
90%
SilverRegisterReview
iqoption
100%
$10
92%
BronzeRegisterReview
Banc de Binary
100%
$250
91%
RegisterReview
Binarymate
100%
$250
90%
RegisterReview
24Option
100%
$250
88%
RegisterReview
All brokers >>

References and Further Reading:

1. Fractal Forex (BG Zinchenko, ET Long – 2012)

2. Do Japanese Candlestick Patterns Help Identify Profitable Trading Opportunities? An Analysis on Selected Forex Markets (AA Ameen – 2013)

3. Forecasting Foreign Exchange Market Trends: Is Technical Analysis Perspective Successful? (E Roudgar – 2012)

4. An Empirical Analysis of Spread for Two Types of FX Brokers (A Hashemifar – 2012)

5. Trading and Investing within the Foreign Exchange Market (B McLaughlin – 2013)

John Miller
Follow us

John Miller

John has worked in investment banking for 10 years and is the main author at 7 Binary Options. He holds a Master's degree in Economics.
John Miller
Follow us