Hi everyone and welcome back to this wealthy education technical analysis training course today we're
going to be talking about continuation patterns and we'll be focusing on triangle's flags and pennants
triangles flags and pennants or continuation patterns in either an uptrend or a down trend our graph
to the left shows a flag continuation pattern and a bullish uptrend the pattern represents a price consolidation
with minor support and resistance levels.
We can use the support and resistance levels as by signals and the trend.
If you'll remember we talked about exponential moving averages and how we could use those as support
levels to give us buy signals and sell signals in a trend.
We can use triangle's flags and pennants in the same way.
So what what we're looking for is the stock to pull back in a bull trend.
And when the stock breaks the upper portion of the resistance within the triangle flag or pennant that
break can be taken as a buy signal for the stock.
The same is true in a bear trend when the stock is trending down and then pulls up.
The pattern to form a triangle flag or pennant when it breaks the lower bound of support.
And that pattern then that is taken as a signal to enter the stock on the short side a flag which is
represented here on the graph looks like a rectangle a pennant looks like a symmetrical triangle and
a triangle looks like a triangle on the chart.
What we can have both ascending and descending triangles.
So let's take a look at triangles flags and pennants on the chart.
Let's look at our first pattern which is a flag pattern in the chart of Intel Intel was trending up.
We have the stock an uptrend and we see a pullback in the uptrend here.
That's the upper bound of the flag.
Here's our lower bound.
Our flag after this three day pullback on the fourth day the stock breaks the upper bound or the resistance
level of our flag and moves to the upside.
This could have been our buy signal or we could have purchased the following day after it was clear
that the stock had broken the short term flag pattern the stock continued to move up from here which
is around the twenty five and a half level.
Up to round the 29 25 level before turning down.
So this was a continuation flag in a bull trend and Intel gave us a buying opportunity when the stock
pulled back.
Now let's use the chart of Qualcomm to look at a pennant pattern.
We have Qualcomm and we're looking at an hourly chart and you often see flags and pennants and triangles
on hourly charts that can help guide your trading on a shorter term basis.
So if we look here in July on July 18th we see that the stock is moving
has a slight pullback and then continues the bullish pattern and then for several hours we have a pullback
here.
And support here which is around 50 percent of our green candlestick is also an important number.
And here we have a pennant.
So when the stock breaks out at the end of the pennant pattern it moves up comes back and holds the
support level.
As it moves up a little more we then have the stock coming back and testing the support level which
we can continue to draw here.
And then moving up bouncing off support moving up bouncing off again before it finally moves up off
the 58 level back up to the 62 level and beyond.
So our it ended up being longer term support on an hourly chart which we kind of used to keep us and
a long trade until the stock finally made a move higher.
So that's the stock of Qualcomm with a pennant pattern again breaking out to the bullish side of this
pattern.
Coming back touching support several times and then filing moving higher.
Thank you for watching this video on flags triangle's and Penates and our next video we will look at
another continuation pattern the cup and handle formation.
I look forward to seeing you in the next video.
Thank you.