Definition – What does Continuation Pattern mean?
A continuation pattern refers to a range of technical analysis formations that appear when the price action of a currency pair settles into a range before continuing on in the direction of the primary trend. Continuations patterns include many triangle formations, bull and bear flags, pennants, wedges and rectangles. A continuation pattern is believed to represent the market taking a rest after a sharp rise or fall, before continuing on in the same direction.
ForexTerms explains Continuation Pattern
Continuation patterns are believed to be a mid-trend indicator that a trend will continue on. The problem is that a continuation pattern doesn’t guarantee there won’t be a reversal. Identifying a continuation pattern is subjective and drawing tight bound may lead to many false breakouts before the actual continuation of the trend. Although they do provide a potential trade for technical forex traders, continuation patterns can be unreliable in that they can only be 100% identified once the pattern is complete and the opportunity has passed.
