Continuation chart patterns

Unlike a reversal pattern, it doesn't signal a change of direction, but a possible resumption of the original move.

How do you recognise a continuation pattern?

A continuation pattern appears after a rise or decline is already underway.

After that first move, price stops making clear progress and enters a consolidation.

On the chart, this consolidation forms an area bounded by levels or trendlines.

The signal appears when price breaks out of the pattern in the direction of the previous trend.

How do you confirm a continuation pattern?

A continuation pattern is confirmed when price breaks the level defining its boundary.

Confirmation can come from:

• A breakout from a channel
• A break above resistance
• A break below support

The breakout must follow the original trend's direction to confirm that the move is continuing.

How do you use a continuation chart pattern?

The strategy is to identify an ongoing trend, then a consolidation within that move.

You then wait for price to break out of the pattern before considering an entry.

From that signal, you can define:

1. An entry point
2. An invalidation level
3. A price target

Technical indicators such as RSI can also help confirm the signal.

The main continuation chart patterns

Here are the main continuation patterns, the expected scenarios and the breakout levels to watch for confirmation.