Continuation Patterns
Triangles, flags, and pennants — patterns that signal a pause within an existing trend, not its end.
Where reversal patterns signal a trend is ending, continuation patterns signal the opposite: a brief pause or consolidation before the existing trend resumes in the same direction. Murphy covers triangles (symmetrical, ascending, and descending), flags, and pennants as the main continuation shapes, all sharing a common structure — a sharp initial move (the "flagpole" in a flag or pennant), followed by a tighter, lower-volume consolidation, followed by a breakout that typically continues in the same direction as the original sharp move.
The book is careful to distinguish an ascending triangle (flat resistance on top, rising support below — generally read as bullish, since buyers are accepting progressively higher prices to keep testing the same ceiling) from a descending triangle (flat support below, falling resistance above — generally bearish for the mirror-image reason) and from a symmetrical triangle, whose eventual breakout direction is genuinely ambiguous until it actually happens, making it the triangle variant that most requires waiting for confirmation rather than anticipating a direction.
| Triangle type | Shape | Typical bias |
|---|---|---|
| Symmetrical | Falling highs meet rising lows | Ambiguous — wait for the breakout direction |
| Ascending | Flat resistance, rising support | Generally bullish |
| Descending | Flat support, falling resistance | Generally bearish |
A consolidation that turns out to be a continuation pattern and one that turns into a reversal can look nearly identical while they are still forming — the distinguishing signal, per Murphy, is volume behavior through the consolidation and at the eventual breakout. A genuine continuation pattern typically shows volume contracting through the sideways consolidation (participants losing interest in the pause itself) and then expanding sharply on the breakout in the original trend direction. A pattern that instead shows volume building steadily through the consolidation, or a breakout on unimpressive volume, is a weaker continuation signal and a better candidate for a genuine reversal already in progress under a deceptively simple shape.
- Continuation patterns signal a pause within a trend, not its end — the breakout typically resumes the original direction.
- Ascending triangles skew bullish, descending triangles skew bearish, symmetrical triangles are genuinely ambiguous until the breakout happens.
- Volume should contract through the consolidation and expand on the breakout for a continuation pattern to be trusted — the opposite volume behavior is a warning sign it may be a reversal instead.