A continuation pattern is a chart formation in which an established trend is temporarily interrupted by an opposite movement before resuming its original direction. Bullish and bearish flag patterns provide reference examples. section 10.1.2
Read continuation patterns as templates rather than guarantees:
- Identify the existing trend, the temporary countertrend movement, and the later resumption. section 10.1.2
- Use multiple candlesticks to interpret price action, momentum, volatility, indecision, and possible continuation. section 10.2.1
- Treat pattern recognition cautiously: chart formations are historical templates, and prices may not follow them. section 10.1.2
Bullish and bearish flags
A bullish flag begins with an upward trend, pauses through a temporary downward movement, and then resumes upward. A bearish flag reverses those directions. The pattern describes a possible continuation, not a confirmed outcome. section 10.1.2
