Continuation Patterns

A continuation pattern is like a pause during an ongoing trend. It's when the bulls take a break in an uptrend or the bears rest during a downtrend. When a price pattern forms, it's unclear whether the trend will continue or reverse. So, it's important to watch the trendlines and see if the price moves above or below the continuation area. Usually, analysts assume a trend will continue until there's evidence of a reversal.

Generally, if a price pattern takes longer to form and has a larger price movement within it, the resulting move after the price breaks above or below the continuation area is more significant.

If the price keeps following its trend, the pattern is called a continuation pattern. Common examples include:

• Flags are created with two parallel trendlines

• Pennants are made by two converging trendlines

• Triangles are popular chart patterns in technical analysis because they appear more often than other patterns. The three main types are symmetrical triangles, ascending triangles, and descending triangles. These patterns can last from a few weeks to several months.

• Wedges are formed by two trendlines that would meet if extended, both sloping up or down

Types of Continuation Patterns

FlagsPennantsRectanglesTrianglesWedges