Patterns are used to indicate the performance of different trades in forex trading. Today we’re going to discuss the bearish continuation patterns.
What Are Bearish Continuation Patterns?
There are four different types of patterns that retail traders use for technical analysis. In other words, these patterns aren’t easy to find; they search and find them on the candlestick chart of different financial markets that help forecast bearish trends. Bearish continuation patterns are chart patterns that show the continuation of bearish trends in market finance.
These patterns are considered the best because they’re forecast with the trends. If you want to learn about these continuation patterns, you’ll understand this for staying in the game for the long term. The best part is continuation patterns aren’t forecast the price against the trends. As you see, all those things that are part of trading work in an organized manner. In other words, the primary reason behind the success of continuation patterns is that they’re always better than other traversal patterns. In this guide, we’ll elaborate on the different types of these patterns that will give you more understanding of bearish continuation patterns.
Four Types of Bearish Continuation Patterns
Here are the four types of Bearish continuation patterns are given below.
- Bearish pennant pattern
- Bearish flag pattern
- Descending triangle pattern
- Bearish rectangle pattern
If you’re in forex trading, these four types of bearish continuation patterns are very beneficial because they give you the signal to sell. In the start, you need to form these patterns; after that, you’re open to selling the trade that needs to be dealt. if you want to gain more profit, you’ll adopt a new strategy and keep your sell trade open after forming bearish continuation patterns to generate extra revenue. Now the next step is about how to identify these patterns.
How could anyone identify bearish continuation patterns?
The identification procedure is simple, and you’d understand it with some basic practices. You must learn about identifying repeated price patterns to find high-probability chart patterns. In other words, if you don’t have previous knowledge about identifying those patterns. Now I’m going to explain each price pattern, and at the end, you’ll understand everything in detail that helps you gain more benefits.
1. Bearish pennant pattern
First, you need to understand the primary identification of the bearish pennant pattern. To get the idea, you need to know whenever minor retracement forms after a big bearish impulsive wave. The pattern you’ll see at that time is called a bearish pennant pattern. For a better understanding, you’ll see the image of the bearish pennant pattern that is given down below the paragraph. There’s no such thing as a single wave. There are four different types of tiny ripples in the minor retracement. The size of each successive is smaller than the others, and the worst is after forming three to four waves. The price structure you’ll see balanced will be broken and change its direction towards the downward position, and soon a bearish trend will begin. In other words, the bearish impulsive wave has a robust movement of sellers that will always give the traders a look at the flag. Similarly, at the same time, things will start changing, and the minor retracement is acting like a small flag at the end of the pole. In other words, this is what we call the simple price structure behind the bearish pennant pattern.
2 Descending Triangle Pattern
This type of pattern is coming at number two, which is a price structure that is used for resembling the path of a ball bouncing with a significant decrease in the momentum of each bounce. In other words, here, the main floor works like a support zone, and the moment of the path ball will act as a price wave. There’s no doubt in this pattern that the price will bounce like a support zone, but the bounce will be shorter than the previous. Images are the best source of giving the idea to the reader so that you can see the image below to get the complete idea about it.
At the start, the wave formed is considered the largest; others are former forms created than the first. You know it’s a complete process, and once three to five waves are included, the price will break the support zone. At that moment, the bearish trend will start, which means descending triangle pattern indicates the bearish continuation patterns. This pattern will be used most of the time in technical analysis in trading because of its straightforwardness.
3. Bearish Flag Pattern
The bearish flag pattern is the type of pattern that comes on the number third and is quite familiar with the bearish pennant pattern. Similarly, minor retracement forms in the case of a bearish pennant pattern. On the other hand, in comparison with that, the more significant retracement will be formed on a bearish flag pattern. In other words, the main difference we’ll see behind that is the flag size of both are different.
As you know, a flag has two components and a pole representing some signs. The flag shows us the bullish retracement, and the bar represents the bullish channel. In other words, when the price breaks the bearish channel at that moment, the bearish trend will start. You must know some signs to identify the bearish flag patterns completely. First of all, the thing that you need to notice is the bearish impulsive wave(pole), and the second one is the bullish retracement wave within the price channel(flag). After understanding and finding these three price patterns, all those things are essential. You’ll get the idea to be ready and open a sell order. The track is critical to consider at the end breakout of the price.
4 Bearish Rectangle Pattern
A bearish rectangle pattern is a symbol of the sideways structure of the market. On the other hand, after the bearish trend breaks the bearish direction, we consider this the emblem of the bearish trend continuation. In short, if you want to understand the price structure, you’ve to see the images of this rectangle pattern.
Before we start this in the first phase, you’ll get an idea about the bearish trend formation of lower lows and higher highs. Then with time, the second phase is a sideways price structure that will form a simple rectangle shape when we move forward. When it comes to the price, this triangle breaks in the third and last phases, and a new bearish trend will be formed. So that’s enough for the bearish rectangle pattern.
These patterns are essential if you want to become a profitable trader in the future. But you’ve to be high at another potent skill, risk management. You don’t need to go very broad. You’d amount to learn. In other, you’ve to be very good at a few patterns. The more simple you keep it, the better trading goes. Complexity always leads you towards a big failure in trading, and once you fail, it’s difficult for you to overcome that failure. Start following these guidelines for better growth in the future.