How to trade Continuation Pattern

Disclaimer - Not financial advice!

Trading is your own responsibility

First of all i would like to thanks entire Traders Reality Community!

After publishing Peak Formation.pdf i’ve received lot of support and private messages

On that pdf i’ve shared how to trade Peak Formation W pattern however this isn’t the only
setup i trade
My favorite setups are peak formation right leg and Continuation after peak formation

This is the main pattern that Tino always talks about, we’re going to dive into understanding
where to expect vector candles, wicks, stopping candles,type of entries, take profits levels ,
understand timing of moves and confluences that we can have in our favor
This is the best setup you can trade

If you pay attention to vector candles,wicks and other details you can understand what
market maker is trying to do, we’re basically waiting for MM to shift out of peak formation,
retrace to induce more people in wrong direction and finally start the movement to the
upside

Setup Names

Psychological behind Setup

First leg : MM induces very aggressively retailers to enter short (usually happens with very
strong 3 vector candles and 2-3 pins on the bottom )
Middle leg retrace : Slow movement until ema 50, this middle leg retrace stop many people
that shorted on the bottom of first leg + give them another opportunity to buy the dip
Second leg : MM aggressively push away from ema 50 with 1-2 red vector candles, retailers
enter short on the bottom of second leg and get trapped while MM filled his bags with lot of
long positions on both first and second leg drop
Now market maker can’t afford to lose so he must start mark-up phase
Shifting Zone : This is where Market Maker will stop all trapped people, and start recovering
his previously opened positions, you usually get 2-3 strong green vector candles moving
away from Peak Formation ( shifting out of peak formation )
Retrace : This retrace is very important, they will try to induce retailers to short for the last
time making them believe ema 50 will isn't going to hold
Continuation : Finally start the movement to the upside
 Where to expect Vector Candles and Pins

MM will open mostly of his long positions during first and second leg drop, on middle retrace
he’s going to induce retailers to enter long with that stopping candle
Shifting zone happens near ema 50 zone, you need a strong aggressive movement that
shifts away from peak formation, you should expect 2-3 strong vector candles before a
retrace
Most important part is understanding mm behavior on possible retrace, usually what
happens is that mm will try to open other long position while inducing retailers to enter short
near ema 50, pin 3 times and start continuation to the upside
I think that there are two main way to trade this retrace continuation with low risk

1. If you point Fibonacci Retracement from Shifting Zone end to Retrace you can wait
for them to break 80 % level and place your stop loss under 60 % level
2. When MM induces shorts on retrace, you trade a peak formation that happens on
smaller timeframe
I’ve tried to find a possible exploit to risk minimal amount of $ on this retrace continuation
setup using fibonacci tools, here’s what i’ve found out
100 % Fibonacci level is shifting zone end, 0 % will always be red vector candles retrace
There are 3 main scenarios that plays out :
 1st Setup

Scenario 1

Candle closes above 80 % level with conviction ( it can also be a normal retailer candle ) and
price continue to go up
 Scenario 2

Candle will close above 80 % level, retrace to literally 60 % level (or pin slightly below ) and
continue the movement to the upside
 Scenario 3

This is the mistake that lot of people makes, this happens many times, is very important to
wait for break of 80 % level to possibly enter long

So we understood that price can just break 80 % level and continue up, break 80 % retest 60
% level and continue up or just pin above 80 % level and drop from there
So we know that the max loss we can give to MM is slightly below 60 %
You can test yourself using fibonacci on this sort of setup, you will see that it plays out
beautifly and is very useful to get in a perfect trade with minimal drawdown, we are trying to
understand when setup plays out, how to risk the less amount possible and where exactly
we need to enter
All i can say is that those two fibonacci levels are very useful in this setup
I will talk later about optimal entries
 2nd Setup

On 2nd type of setup we’re going to trade a possible Peak Formation that happens on
smaller timeframe

My general rule is, if setup is happening on 1h i trade peak formation retrace on 15m
If 15m i trade retrace peak formation on 5m
If 5m i trade retrace peak formation on 1m

Main Setup | Retrace Peak Formation (timeframe)

1h | 15m
15m | 5m
5m | 1m

Don't take this as strict rule, many times it also happens that from 1h i move to 5min to see
the smaller Setup to play out

What we’re looking for is wait for price to retrace around ema 50 with red vector candles,
when price gets there we move to a smaller timeframe like i suggested before
We’re looking to trade a very similar setup that happens on lower timeframe
Your advantage in this case is HUGE Momentum that comes from retrace continuation setup
happening on your higher timeframe
So let’s say you are on a possible 1h retrace, you move on 15 minutes and this is what you
see, you can try two type of trades

You understand that market makers are building longs again, you can either wait for peak
formation to plays out and trade continuation setup like you are doing on your higher
timeframe or you can entry on when they break 80 % level of Peak Formation
Stop loss will always be predetermined slightly below 60 % because we know that in terms
of probability what they tend to do is ,break 80 % level, retrace to max 60 % level and
continue up
So this is the general setup
On left we have Bigger timeframe, on right smaller timeframe
We’re not trying to blindly enter on retrace, but actually waiting for market maker to show
their hands and take advantage of big higher timeframe momentum that might come after
you take your trade on smaller timeframe
This is what tino means when he says pattern within pattern

Confluences

Ideal Continuation Pattern must have :

- Good looking peak formation (MM buying on first and second leg with many pins to
the downside) ,check PeakFormation.pdf confluences section for additional info, we
don’t really need to be very strict on peak formations if we’re trying to trade
continuation setup
- Good looking Shifting Zone , you wait for 2-3 strong green vector candles that shifts
out of peak formation
- Low number of pins on Shifting Zone End (very important)
- Good retrace to ema 50
- Always wait MM red vector candles around ema 50
- Pins to the low on retrace, the more you get the better it is, usually movements starts
after 3 pins down on retrace but as you know there are always variations
- After retrace price moves away from ema 50 and candle closes above 80 % Fibonacci
level
- Must have unrecovered liquidity above possible continuation to drastically increase
probability
Common reasons why it doesn’t play out :

- Peak Formation reasons ( Check PeakFormation.pdf “Most common reason why W

doesn’t play out” section )
- Green vector unrecovered candles on the bottom of second leg peak formation ( i’m
talking about the bottom and not when they break ema 50 with shifting candle )
- Not clear shifting zone ( happens too slow or with just 1 green vector candle ), you
want price to get far from ema 50 with many vector candles for a possible good
looking shifting zone
- Too many pins to the upside on Shifting Zone End ( this is very important ), if you get
too many pins to the upside it means they are probably just grabbing
liquidity,inducing retailers to long before continuation to the downside
- Retraces way below ema 50 ( very common mistake )
- Low amount of pins to the downside on retrace
- Continuation after retrace happens too slowly without momentum
- Shifting very aggressively from peak formation ( i don't mean a normal shifting zone
strong movement ) but i mean a very strong aggressive move that doesn’t retrace
and continue going up, i will NEVER fomo in because you might open your long and
price could go against you in literally 1 minute without any predetermined stop loss
(very common mistake )
- Price doesn’t retrace enough from Shifting Zone End to 50 Ema retrace ( i need some
sort of solid retrace with red candles + pins on ema 50 )
- Getting in at middle of continuation without any clear plan ( always wait for candle to
close above 80 % fib level )
- If middle leg peak formation retraces on ema 200 you wait for shifting zone and
retest on ema 200 (not ema 50) IMPORTANT
- If you don't see red vector candles on retrace avoid getting in
- Always use Fibonacci 80 % level for possible entry, always wait for candle close (This
is going to save you lot of bad entries)
- No liquidity to recover above Shifting Zone End
- Not paying attention on what happens on higher timeframes
 Additional Confluence

Hyblockcapital
Be sure to have good levels of liquidation above Shifting Candle End

Aggr.trade
This tool is very useful to understand if they are liquidating retailers when price goes
above 80 % fibonacci zone, aggr trade keeps track of every exchanger, what i do is
open 1 min chart and i make sure that market makers start to liquidate shorts while
price is going above 80 % fib

Entry

On both 1st and 2nd setup we will always use Fib 80 % level to and place stop loss
slightly below 60 % level to really have max risk reward in our favor
You must wait for candle to close above 80 % level

Green line is entry on candle close above 80 % fib, red line is stop loss below 60 %
 Take Profits

I mainly take profits based on Market Makers recovering previously unrecovered liquidity
I take profits at 75 % height of unrecovered big liquidity pools

Extra tip : Align Hyblock Capital Liquidation levels that matches with market makers
unrecovered liquidity for optimal take profit levels

If you don’t have unrecovered liquidity above you wait for possible first leg LVL 3 Peak
Formation before taking profits (3 strong green vector candles very far from ema 50 with 2-3
pins to the upside)
I always like to take 25 % profit when price moves at least 1 % from my entry to ensure a
winning trade (possibly moving stop loss in profit if you see high momentum to the upside
without retracing to 60 % level)

For additional Info about take profits check my other pdf

 Examples

1st Setup

2nd Setup ( advanced entry on smaller timeframe retrace)

1st Setup

2nd Setup
If we move from 15m to 5m on retrace we see this

Or you can actually use fib from shifting retrace continuation but chart will look a bit messy if
i do that ( see how 60 % reacts perfectly and dont stop you out ) , on lower timeframes you
aren’t likely to get a perfect shifting zone retrace continuation because there is huge
momentum coming from higher timeframe so i suggest you to get in somewhere near peak
formation possibly
1st Setup

2nd setup
In this case we didn't have a clear second leg so this was hard to trade
You could have traded it like this, we never got a retrace because huge momentum came
from higher timeframes
1st Setup btc 5 min

See again how 60 % fib saved out trade

That happens almost every time

2nd setup 1 min

On 1 min it looks like this

1st setup

2nd setup we move from 15 ùmin to 5 min

Example Failed Continuation
I don't know if this should be considered failed but reward was too small to possibly take this
trade, 2nd Setup entry on retrace would've worked out good

But if we would have followed my first pdf peak formation we would have longed literally
bottom of second leg

I consider trading as a probability game, like a score system

Each good confluence increases your probability of X amount
Bad confluence decreases your probability of X amount
If you add all them together you are very likely to succeed in this game