Definition
Trend continuation is the resumption of a trend in its original direction after a temporary interruption. Trends rarely move in a straight line; they pause to consolidate, and a continuation occurs when that pause resolves with the prior trend simply picking up where it left off.
In chart-pattern analysis, the term also names a whole family of formations, such as flags, pennants, and many rectangles and triangles, that statistically tend to break in the same direction as the trend that preceded them. These are continuation patterns, as opposed to reversal patterns.
Why it matters
How it works
A continuation pattern forms when a trending market enters a period of consolidation, sideways or counter-trend drift, while buyers and sellers digest the prior move. Volume often shrinks during this rest phase, signaling reduced commitment.
The pattern completes when price breaks out in the direction of the original trend, frequently on renewed volume. Because the trend was merely paused, the breakout tends to carry price at least as far as the pattern is tall. If price breaks the other way instead, the formation has acted as a reversal, not a continuation.