Continuation
Price resuming its existing direction after a pause or pullback.
Full explanation
Continuation is what happens when a trend pauses, absorbs profit-taking, and then carries on. The pause may be a shallow pullback, a short sideways consolidation, or a quiet period around a scheduled release.
A continuation is confirmed by structure rather than hope: in an uptrend, the pullback holds above the previous low and price then closes above the recent high. Until that happens, the pause could equally become a reversal.
Continuation setups are popular because they combine a defined risk point — beyond the pullback low — with a direction the wider market has already demonstrated.
Why traders watch it
Most sustained moves consist of a sequence of continuations. Recognising them keeps you positioned with the dominant flow rather than trying to pick turning points.
The Trading Plan uses continuation language when conditions favour trend-following behaviour, always paired with the confirmation required before acting.
Trading considerations
- Wait for the pause to resolve rather than assuming it will.
- A pullback that erases most of the prior move is a warning, not a continuation.
- Check the calendar: a release during the pause can change the outcome entirely.
Educational guidance only — never a trading signal or recommendation.
Related indicators
ATR (Average True Range)
ATR, or Average True Range, measures the average distance a market travels over a chosen number of periods, including gaps. It is a pure volatility reading with no directional bias. Traders use ATR to set stop distances that respect normal noise, to size positions consistently, and to judge whether current conditions are unusually quiet or unusually fast.
Bearish candle
A candle that closes below its open — sellers finished the period in control.
Bollinger Bands
Bollinger Bands are a volatility indicator made up of a moving average with upper and lower bands that expand and contract as market volatility changes. They help traders judge whether price is becoming stretched, identify volatility changes, and support both trend-following and mean reversion analysis.
Breakout
A breakout occurs when price moves decisively beyond a defined level such as a range high, trendline or consolidation boundary. It signals that the balance between buyers and sellers has shifted and can start a sustained move. Breakouts also fail often, so traders look for confirmation through follow-through, expanding range and a successful retest of the broken level.
Bullish candle
A candle that closes above its open — buyers finished the period in control.
Candle
A single bar on a candlestick chart showing the open, high, low and close for one period.