Continuation Pattern
Continuation Pattern is the common name for patterns that predict prices will continue to follow the current trend if a pattern appears.
Patterns commonly used are the Triangle Pattern, the Flag Pattern, the Pennant Pattern, and the Rectangle Chart Pattern.
Meaning
The trend continues after the breakpoint
The name indicates that the price trend is likely to resume the trend after the pattern is completed. However, prices can still reverse after the appearance of Continuation Patterns, although the possibility is not high.
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The pattern continues to be very effective when it was previously a strong trend, which was just a break in the middle trend. For example, that is a good signal if the price is on a very good uptrend and forming a small flag pattern, then the price quickly breaks the overhead resistance and continues upside down.
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Trend reversed
However, if the pattern appears to be the same size as some previous oscillations, this indicates that the price range is increasing. The trend will no longer be clear, become unstable, and there will be signs of a reversal from the current trend.
When a trend is not clear
If the growing trend is weak but the continuation pattern appears repeatedly, it is not convincing enough to use these patterns signal. They are only effective on a strong and obvious trend.
A strong trend shows that the price is strongly dependent on one side of sell/buy, and it is not easy to break the trend. This means that if a spike occurs and the price reverses, it is easy to see.
