Part 3 : Continuation Pattern (click on chart to enlarge for greater detail)
This post is the final part in our three-part series highlighting Polaris Trading Group’s proprietary Total Market Sync (index of indexes).
Today’s focus is Continuation Pattern (sell example)…Let’s get to the details:
First of all it is assumed that price is in an established trend (bullish or bearish)…This example price is in an established downtrend with the following conditions applying:
1.) Price 2.) Price 3.) Price
The conditions above are fairly easy to see but there is a bit more observation before a trade setup and entry appears. Typically following an initial breakout from a prior level price will find a temporary stopping point where it consolidates so market participants can re-assess current valuation. If there is indeed a “shift” in value to lower levels (in this example) then price will “continue” its current down leg until traders agree upon a new level of “fair value” forming new support.
So how do we enter?
It’s during the temporary consolidation phase that we check the above conditions to determine if they are still valid. If they are we are looking for an entry in trend direction when the 8/13 ema begins spending more time beneath the 34 ema (see chart for additional detail). We are not looking for the perfect entry here, just one that keeps us in-sync with trend. Look for trade entry within the Coil Finder Zone…this will provide a level where specific risk parameters can be measured for position sizing. The best timing of the entry is when the 8/13 ema “kisses” a downward sloping 34 ema (see chart)…which will typically precede a break of the consolidation pattern and the primary trend accelerates further. Profit targets are calculated by PTG traders (moderators)…Volatility Trailing Stops are preferred in managing a winning position.
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Good Trading