Monday, 25 January 2010

Learn To Trade

by Niki Arinze

Learn to trade: Continuation patterns – Continuation patterns are patterns that form when price takes a pause (i.e. trades sideways, choppy, or moderately pulls back) in the contrary direction of the major trend. It is also important to try and recognize what the major trend is so that when pause periods occur, you don’t mistake them for actual changes in trend. Take a look at CREE. We can see that CREE was in an uptrend from March. It moved up for three months and then had a gap day 5-27-09. If you were watching this stock, there was no need to rush in. Stocks ALWAYS (and I do mean ALWAYS) provide an opportunity to get on board of a trend. Sometimes you have to wait longer than others. The period from June through the middle of July was that time. You will see the a-b-c zigzag I drew to signify one of the continuation patterns that I think works very well. The time to go in was after the MACD crossed over in mid July. This continuation pattern provides an initial entry point or an additional entry point (if you got in back in March) to add to a position to take advantage of the uptrend.

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