Utilizing Continuation Patterns
Following the historic vote by Britain to leave the EU on the 23rd of June, we witnessed a massive flow of capital back into the U.S Dollar, as investors sought safety amongst uncertain times.
The EUR/USD reflected this flow of capital within the price action, as the EUR/USD fell over 500 pips following the vote! When price makes such a massive move, it always needs time to rebalance before making its next move.
We can see that this rebalancing took the shape of a consolidation pattern known as a symmetrical triangle; which often acts as a continuation pattern for the current trend in motion.
If price can close below this symmetrical triangle by the end of the trading day, we can then expect the next leg lower in the EUR/USD to commence!
The market is continually flowing between periods of high volatility & low volatility. As traders we must use the times of low volatility to perform our analysis, and get positioned for the next increase in volatility; which is often the next run within a trend.
Utilizing continuation patterns such as the symmetrical triangle, is a great way to determine the path of least resistance, and get positioned correctly!
Happy Trading!
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