The continuation pattern is a periodic occurrence throughout trending currency pairs in a forex chart analysis. Studies show that when a continuation pattern occurs, a larger one will follow. The identification of a true continuation pattern will assure a forex trader that even though the price of a currency pair is going against the larger trend, the trend remains intact.

So whether you are on the short or long side of a currency pair, your ability to make use of the forex chart analysis to identify the formation of a continuation pattern should boost your confidence about your trades more.  However, it’s important to note that a continuation pattern can quickly turn into a full reversal in a very short time.  So you’ll also need to add some sort of confirmation to your forex chart analysis.

Bullish Continuation Patterns in Forex Chart Analysis

There are many patterns which will confirm a continuation of the current trend of your currency pair.  And not only will they look different in your forex chart analysis, they will also imply different things about the duration of the trend.

Here are some of the most important long continuation patterns:
ascending triangle;
flag formations;
symmetrical triangle;
bullish wedge formation; and,
bullish pennant formations.

Bearish Continuation Patterns in Forex Chart Analysis

Continuation patterns that confirm a short position in a currency pair are the reverse of the long continuation patterns.  So you’ll have bearish wedge and pennant formations.  The symmetrical triangle and the flag formations, when identified, are simply indications that the prevailing trend is intact-regardless of the direction.

The Significance of a Continuation Pattern In Forex Chart Analysis

So what do you do when your forex chart analysis indicates a continuation pattern?  The very first thing you should do is to look for some confirmation.  Use moving averages, candlesticks,  or momentum indicators to add to the findings of your forex chart analysis.

Once you have confirmed that the prevailing trend is intact, you can do one of two things.  Firstly, you can do nothing.  There’s no reason to tinker with something that’s already working.  Secondly, you may want to add to your position-this of course assumes that you have enough margin and that you are properly diversified in your other positions.

Once you develop the ability to use forex chart analysis to identify continuation patterns, you’ll be able to make better trading decisions on an active currency pair.  However, you need to also know the different types of continuation patters.  The effect on your position. And most importantly, to look for confirmation of the continuation pattern in a forex chart analysis.