What is a Continuation Pattern?

What is a Continuation Pattern?

A continuation pattern signals that a trend is likely to resume after a brief pause. Examples include flags, pennants, and triangles that form as traders consolidate positions before driving price in the original direction.

Continuation Example Checklist

• Prior trend: Strong directional move leading into the pattern.
• Range structure: Tight consolidation with lower volatility.
• Breakout trigger: Close beyond pattern boundaries on rising volume.
• Measured move: Project the prior swing to estimate targets.

Trading Continuations

• Wait for confirmation: Enter after price closes outside the pattern.
• Place stops wisely: Keep stops beyond the opposite side of the pattern or use ATR multiples.
• Scale targets: Take partial profits at measured moves and let runners capture extended trends.
• Monitor news: Avoid surprise data that may invalidate the continuation.