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Once you are comfortable with various formations of reversal patterns, you can move on to understanding'continuation patterns'. Continuation patterns tend to smoothen the sharp rises or declines in the price of a scrip and predict future price formations. Completion of continuation patterns indicates that the price will follow the original trend. It is always advisable to interpret continuation patterns along with other supporting information, such as the strength and maturity of the trend, volume figures, the time horizon, etc., before taking a position in the market. Let us now analyse the formation of various continuation patterns and their variants.

Triangles
These formations are most common and are formed by plotting the upper and lower trendlines. The upper trendline is formed by joining the tops and the lower by connecting the bottoms. The incline of these trendlines indicate the type of triangle formation such as symmetrical, ascending, descending or broadening triangle. Each of these triangles are depicted by way of following figures.





Pennant:
Pennants are like symmetrical triangles where the upper trendline is declining and the lower trendline is rising. These formations are generally found over a period of three to four weeks and can be depicted by way of following diagrams:



Flags:
Flag formations are like parallelograms - with two trendlines stooping upwards or downwards, indicating formation of a flag like image. This can be exhibited by way of the following diagrams:



Wedges
Wedges are like triangles and have a significant incline indicating upward or downward movements. There are two variants of wedges. These may be rising wedges or declining wedges. These wedges may be depicted in the following manner:



Rectangles
Rectangles indicate a sideways movement of prices and are formed by connecting the almost identical tops and bottoms. A violation or penetration of the trendlines indicates a future trend of price movement. Bullish and bearish rectangles may be indicated as under:


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