Jim Kane – The 4-Point Continuation Pattern
*Ebook (PDF)
The 4-Point Continuation Pattern is designed to help satisfy Critical Element number one of the ‘Plan for a Trade’, the Potential Trade Area (PTA). This article introduces a new pattern developed at Kane Trading. Although not a very common pattern, it can point to some very useful potential trade areas when it does appear. The pattern, by the very nature of the setup, can allow a very tight (but still technical) stop loss to be placed. This pattern has some superficial resemblances to a triangle pattern, but the similarities end on the surface. The article outlines a detailed list of conditions and criteria necessary for a setup to be considered a ‘4-Point Continuation Pattern’. Some of these criteria are very Fibonacci intensive, and make use of the grouping technique from Advanced Fibonacci Trading Concepts. The pattern seems to be equally common in uptrends or downtrends, and can be found on essentially any timeframe. The pattern appears not only in stocks and stock indices, but also in commodities. For instance, one example in the article is in the dollar index. This article should be of interest to any trader who likes patterns and Fibonacci, and who is looking for another technique for finding potential trade areas.
Article Level: Intermediate to advanced
92 pages (including front matter), 66 charts
Prerequisite: Advanced Fibonacci Trading Concepts, or equivalent. Not mandatory, but strongly suggested. The 4-Point Continuation Pattern makes use of internal and external retracements, and assumes the understanding of the concept of the Fibonacci grouping technique. Groupings are put on chart examples without explanation of the grouping technique, as that is outside the scope of the article. Although the pattern in this article can be used without either Fibonacci retracements or the Fibonacci grouping technique (by simply ‘eyeing’ charts, and accepting or rejecting the pattern on a more ‘holistic’ overview of the setup), it is not recommended.
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