Definition
Continuation patterns are chart formations that form during a temporary pause in an existing trend and imply that the trend will continue once the pause ends. Flags, pennants, rectangles, and many triangles belong to this family. They are interpreted as moments when the market catches its breath before pushing on in the same direction.
The defining idea is that the trend is not over — it is merely interrupted. Where a reversal pattern signals a change of direction, a continuation pattern signals a brief consolidation followed by a resumption. Recognizing which family a formation belongs to is one of the central tasks of pattern analysis.
Why it matters
How it works
A continuation pattern develops after a strong directional move. Price consolidates into a recognizable shape — a small flag, a tight pennant, a rectangle — usually as volume contracts. The pause lets earlier buyers or sellers reset before the trend continues.
The pattern is confirmed by a breakout in the direction of the original trend, ideally on expanding volume. Many continuation patterns also provide a measured target: the size of the move into the pattern is projected from the breakout point. Until the breakout occurs, however, the classification remains provisional, since a would-be continuation pattern can still resolve as a reversal.