Bullish Trend-Confirming Patterns

Not all double-stick patterns indicate that a trend reversal is forthcoming. Some of them actually tell you that the market is going to continue in the direction it’s already going. It may not sound very exciting, but there are some benefits to getting confirmation that a trend is going to stay in place.

First, if you’re considering selling a stock because you believe the price is close to peaking, the appearance of a pattern showing the trend is still in place may help you improve your exit price. After all, it’s always frustrating to sell and then watch as a stock continues to climb in value. Also, everyone has heard that the way to make money buying securities is to buy low and sell high, but there are plenty of traders that buy high and sell higher.

These people are known as trend followers, and they can embrace these trend confirmation signals to the tune of some outstanding returns. Think you may want to join their ranks? If so, read on for a few examples of bullish double-stick patterns that do a terrific job of confirming the continuation of a trend.

Bullish thrusting lines

The first trend-confirming pattern I cover here may be a bit difficult to pick out of a chart at first glance, but it’s worth understanding and looking out for it. Unlike the double-stick patterns I describe in the preceding sections in this chapter, it’s critical that the bullish thrusting line pattern appears during an uptrend, not a downtrend, because this pattern ...

Get Candlestick Charting For Dummies® now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.