Continuation Patterns
Patterns that indicate the current trend will likely continue.
What Are Continuation Patterns?
Continuation patterns represent a pause in the current trend, followed by a breakout in the same direction. They form during consolidation phases.
>Key Principle
"Trade with the trend, use patterns for timing."
How Continuation Patterns Form
Strong Move
Price makes a sharp directional move
Consolidation
Price consolidates in a pattern
Breakout
Price breaks out in original direction
Bullish Continuation Patterns
Bull Flag
Sharp rally followed by consolidation
Bull Pennant
Triangular consolidation after rally
Ascending Triangle
Flat top with rising lows
Cup & Handle
U-shaped cup with small consolidation
Bearish Continuation Patterns
Bear Flag
Sharp decline followed by consolidation
Bear Pennant
Triangular consolidation after decline
Descending Triangle
Flat bottom with falling highs
Falling Channel
Parallel lines sloping downward
How to Trade Continuations
Entry Point
Enter on breakout from pattern boundary
Stop Loss
Place below pattern low (bullish) or above pattern high (bearish)
Target
Measure the flagpole and project from breakout
Success Tips
- • Volume should decrease during consolidation
- • Volume should increase on breakout
- • Tighter patterns often lead to stronger breakouts
Watch Out For
- • False breakouts are common
- • Patterns that take too long may fail
- • Always check the overall market trend
>Trading Wisdom
"The trend is your friend. Continuation patterns help you join the party."