What is a continuation pattern?
It’s a price chart formation that is characterized by a pause in the prevailing trend before it resumes its previous direction.

During this pause, the trend is taking a temporary breather as the prices appear to move sideways or horizontally on the chart.

Continuation patterns consist of four elements: the prevailing trend, the consolidation zone (or pause), the breakout point, and the continuation of the prevailing trend.

However, the prior existence of a trend is the most important element because the continuation pattern cannot be achieved without it.

Of course, the breakout point is also extremely important as it determines whether the formation is indeed a continuation pattern and where it’s heading next.

Generally speaking, if read correctly, continuation patterns can help the chartist determine what the market will probably do most of the time.

Common types of continuation patterns include triangles, rectangles, wedge formations, flags, and pennants, and we’ll be taking a closer look at those in our upcoming videos.