Continuation Pattern

A continuation pattern is a chart formation that indicates a temporary pause or consolidation within an existing trend, after which the price is expected to resume moving in the same direction as before the pause. Unlike reversal patterns (which signal a change in trend), continuation patterns suggest the prevailing trend remains intact and is simply taking a breather before the next leg. Common continuation patterns include flags, pennants, rectangles, ascending and descending triangles, and the cup and handle. In technical analysis, continuation patterns are valued for providing relatively low-risk entry points — a trader can enter in the direction of the existing trend after the pattern's breakout is confirmed, with a tight stop-loss placed just inside the pattern's boundary.