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.
Flags and pennants are covered as the shorter-duration, more sharply-angled cousins of the triangle family — a flag consolidates in a small rectangle that often tilts gently against the prevailing trend, while a pennant consolidates in a small symmetrical triangle, but both are read the same way and typically resolve within a much shorter timeframe than a triangle does. Murphy stresses that the "flagpole" — the sharp initial move before the consolidation begins — is not incidental to the pattern; it is the source of the psychological energy the eventual breakout is expected to continue, and a flag or pennant that forms without a genuinely sharp, high-volume flagpole preceding it is a much weaker version of the pattern.
| 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 |
The same measured-move logic from the reversal chapter, applied to a continuation pattern: the flagpole's own height is projected forward from the breakout point, treated as a rough guide rather than a guarantee.
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.
This is the same volume-as-confirmation principle from the reversal-pattern chapter, simply applied to a shape that looks structurally different — a reminder that Murphy treats volume less as a pattern-specific rule and more as a single, general-purpose lens applied consistently across every chart shape in the book. A trader who has internalized the volume principle from the reversal chapter already has most of what they need to correctly read a continuation pattern, since the underlying test — does volume support the story the price shape is telling — does not change between chapters.
Imagine a stock that rallies sharply on heavy volume, then drifts sideways in a tight range for two weeks on steadily shrinking volume, then breaks out to new highs on a sudden volume spike. Every element of that sequence — the flagpole, the quiet consolidation, the confirming breakout volume — matches the textbook version Murphy describes, which is exactly what gives the pattern its credibility.
Murphy's bullish and bearish bias labels for ascending and descending triangles are described as a general tendency, not a rule that holds every time, and the book is careful not to overstate them. An ascending triangle can still break down, and a descending triangle can still break up — the flat side of the triangle represents a genuine level of supply or demand that has not yet given way, and until it actually does, the pattern remains unresolved regardless of which way the sloped side is leaning. This is why the book pairs even the directionally-biased triangle types with the same breakout-and-volume confirmation requirement used everywhere else in this course, rather than treating the shape itself as sufficient grounds to anticipate a direction before the breakout actually happens.
- 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.
- Flags and pennants are shorter, sharper versions of the same continuation logic — the flagpole's own height projects a rough breakout target.
- 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.
- Even a directionally-biased triangle isn't a reliable bet until its flat side actually breaks — the shape alone is not sufficient grounds to anticipate a direction in advance.