Bullish Continuation Patterns That Align with Intermediate Cycle Timing
- 14 hours ago
- 5 min read
When markets are trending upward but momentum begins to cool, it’s easy to mistake the shift for an outright top. But cycle-aware traders understand that not every pause signals a reversal. In fact, many are simply bullish continuation patterns—brief retreats that reset overbought conditions before the trend resumes.
This is exactly what the current environment is showing.
The intermediate cycle is projected to top around May 22, followed by a short-term pullback into the end of the month. However, that pullback appears limited in scope. Why? Because the long-term cycle remains firmly bullish, offering a supportive backdrop.
Rather than fearing breakdowns, we’re preparing for a classic “pullback within an uptrend”—the kind that catches bears leaning the wrong way and leads to fast reversals.
The Key to a Valid Bullish Continuation Pattern: Structure
Not all pullbacks are equal. What matters isn’t just that price dips—it’s how it dips.
In Steve’s framework, a valid bullish continuation pattern during a rising intermediate cycle often has these traits:
Price remains above key crossover averages (like the 10-day)
The decline respects the 10-day price channel or only marginally pierces it
Short-term cycles show deeper weakness, but intermediate and long-term remain pointed up
The move lower is shallow, consolidating gains instead of reversing trend
This structure tells us the market is digesting, not failing. It builds the foundation for continuation.
And when price reacts positively near support levels like the 10-day moving average or lower channel boundary, that’s often the trigger.
Why Timing Matters More Than Patterns Alone
While many traders look for textbook flags, pennants, or wedges, Steve’s approach skips visual formations and focuses on timing and cycle confirmation.
It’s not about what the pullback “looks” like—it’s about whether it fits within the projected cycle framework. For example:
A decline into late May, aligned with the projected intermediate top, followed by an early June cycle turn up—that’s a cycle-validated bullish continuation.
A drop that respects the 10-day average and holds above the 10/20 crossover averages? That’s structure confirming timing.
This removes the ambiguity of chart patterns and replaces it with data-driven confidence.
What to Expect After the Dip: Higher Lows, Then Higher Highs
The most bullish continuation patterns don’t just stop a decline—they launch a new advance.
That’s the likely scenario if the SPY and QQQ respect their support levels and cycle timing plays out. Based on composite projections, both SPX and NDX are expected to turn back up in early June and continue climbing into July, with only minor pullbacks along the way.
If the late-May dip proves shallow and orderly, we’ll likely see:
Institutional buyers re-entering near key support
A reversal that squeezes early short-sellers
Renewed upside momentum with strong price leadership
This is how “buy the dip” works—not by guessing, but by identifying where cycles and structure align.
Common Mistakes Traders Make During Bullish Continuation Setups
Understanding continuation setups isn’t just about what to do—it’s also about knowing what to avoid.
Here are the most common mistakes traders make during late-cycle consolidations that are actually bullish setups in disguise:
1. Selling too early based on fear of a top.
A brief decline after strong gains feels like the end—but with rising intermediate and long-term cycles, it’s usually just a reset. Acting on fear, not structure, leads to premature exits.
2. Shorting into strength.
Many traders mistake consolidation for breakdown. They short a “failure” at the highs, not realizing the market is preparing for another leg up. This leads to sharp losses when the trend resumes.
3. Using the wrong tools.
Instead of relying on cycle timing and structure, traders use lagging indicators or chart patterns that offer no real edge. Steve’s system avoids this entirely by sticking to time-tested cycle logic and crossover averages.
4. Ignoring context.
A pullback doesn’t mean the same thing in all conditions. In rising cycle environments, it’s often an entry—not a warning. Failing to read the full cycle map causes missed opportunity.
Avoiding these errors allows traders to stay focused, disciplined, and aligned with the broader trend.
Check our post on 4 Risk Management Techniques for Late-Cycle Trading Discipline for more info.
People Also Ask About Bullish Continuation Patterns
What is a bullish continuation pattern?
A bullish continuation pattern is a temporary pullback or consolidation that occurs within an existing uptrend. Rather than signaling reversal, it resets momentum and builds a base for further upside. In Steve’s method, this isn’t defined by chart formations—but by cycle timing and price structure. The pattern is in the sequence of the cycles—not the shape on a chart.
How can you tell if a pullback is a continuation or a reversal?
Cycle context is key. If short-term cycles decline while intermediate and long-term cycles remain upward, and price respects crossover averages or price channels, it’s likely a continuation. A reversal would involve deeper breaks of support and a downturn in intermediate cycles. Watching where price reacts relative to expected time-based turns is more predictive than guessing based on candles alone.
What indicators work best with continuation patterns?
Instead of traditional indicators like Bollinger Bands or RSI, Steve focuses on crossover averages, price channels, and timing cycles. These tools help filter out noise and confirm whether the market is consolidating or breaking down. Crossover tools in particular help frame exact entry zones based on risk-managed structure.
How do institutional buyers play into continuation patterns?
Institutions tend to accumulate during orderly pullbacks within an uptrend. When price nears key support zones and holds structure, they often return—causing sharp reversals that trap early shorts and drive the next leg up. Understanding where they’re likely to step in (via cycle structure) lets you participate before the crowd.
Is it better to buy during the pullback or wait for confirmation?
Both approaches can work, but confirmation reduces false entries. Waiting for price to react off support—especially if cycles align with a turn window—gives traders a higher-probability entry with a defined stop. Aggressive traders may scale in near key crossovers, but confirmation traders look for price structure and cycle turns to align.
Resolution to the Problem
Many traders misread normal pullbacks as trend breaks. This leads to premature exits, missed opportunities, or even short positions entered too early.
By learning to identify bullish continuation patterns within the lens of cycle timing, traders gain an edge. They understand that rising long-term and intermediate cycles support higher lows—and that consolidation is often the setup for the next advance.
For example, take a trader who used to panic at the first sign of a red candle. After learning to apply cycle projections and price structure, that same trader now watches for turns, plans stops around crossover zones, and only enters when structure supports it. The shift isn’t just technical—it’s psychological.
With structure, timing, and discipline, these patterns become opportunities—not traps.
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Conclusion
Bullish continuation patterns aren’t about what you see—they’re about what the cycles confirm.
When structure holds, moving averages support price, and timing says “turn,” that’s when opportunity shows up.
By trading in alignment with the intermediate cycle and respecting the rhythm of the market, you reduce risk and increase clarity.
Let others guess. You’re trading with timing, structure, and discipline—and that’s how trends are mastered.
Author, Steve Swanson
