Binary Option Trading - Pennants and Continuation Patterns
Some articles we publish tell about how to pick patterns out from analytical charts in order to detect at what point a price will change its movement or if we believe it to remain the same. Continuation pattern is one of the most important to look for; one of the core indicators inside a continuation pattern which helps to indicate the price movement is a pennant. Let’s havea little more talk about those two things.
Before our talk about pennants we should clarify the difference between the two types of pennants, continuation and reversing ones and try to understand what outcome you will have after you follow each of them. A continuation pattern means that the price of an asset is breaking a consolidation area in the direction similar to the previous trend. And a reversal pattern is the one having a trend which is moving in a different direction after having broken out of the consolidation area.
Pennants are formed when we see a nearly vertical triangular patterns price movement, usually after some drastic up (the drastic move establishes the pennant pole and that nearly vertical move makes its flag). A continuation will indicate a bullish trend will be on. In this case it is advisable to buy call options only. It is worth doing after you see the pennant is forming. You should always keep in mind prices usually travel very fast after they brake a consolidation area of some continuation pattern.
The best thing about a pennant as an indicator is the fact you only have to measure the move in order to get the continuation pattern confirmation.
So, as soon as you get used to pennants, you will see they are a great tool which helps you spot continuation patterns. An as soon as they are spotted, get ready for buying call options.