Continuation triangles as a three-lock experiment

A narrowing range used as continuation

A triangle is outlined with a supply line through isolated highs and a demand line through isolated lows. Those two lines must converge when extended. In this archive workflow the narrowing range is treated as a continuation setup rather than a reversal call.

Isolated highs and isolated lows

Isolated highs and isolated lows are three-bar attempts to push in one direction, with the middle bar holding the extreme used to locate resistance and support.

An isolated high is a three-bar push higher in which the middle bar holds the peak. That peak becomes a resistance reference for the supply line. An isolated low is a three-bar push lower in which the middle bar holds the trough. That trough becomes a support reference for the demand line.

The supply line is the upper boundary of the triangle, drawn through successive isolated highs. It may be flat or descending, and it marks the level whose penetration is treated as the continuation entry. The demand line is the lower boundary, drawn through successive isolated lows. It may be flat or rising, and it marks the level used for the initial protective stop.

When the fourth point appears

The pattern is not complete until a fourth point appears. That point is a later isolated low that stays above the first isolated low, after a second isolated high that does not exceed the first.

A stated timing heuristic is that price often leaves the pattern about two-thirds of the way from the first isolated high to the projected meeting of the two lines.

The higher-timeframe trend filter

Continuation use pairs a daily-bar triangle with a higher-timeframe trend filter, illustrated as a rising eight-week moving average, before a break of either line is treated as the working hypothesis.

That filter decides whether the daily-bar triangle is treated as continuation and which side is favored. The archive illustration uses a rising eight-week average and leadership versus the broader list.

Entry, initial stop and the later trail

The October case defined entry as a penetration of the supply line and placed the initial stop below the demand line.

After the entry is profitable and the eight-week moving average has moved above the entry price, that average can replace the initial stop as a trailing exit. The archive trailing stop is therefore two-stage: the initial stop sits beyond the opposite triangle line, then migrates to the higher-timeframe moving average once that average has risen through the entry price.

Measured objective and failed continuation

A measured objective is formed by taking the widest height of the triangle and projecting that distance from the apex, after which a partial reduction of the position can be considered.

Continuation-pattern failures are treated as an early warning that a larger correction may be developing. Successful continuation resolutions are treated as evidence that the broader advance remains intact.