What Is a Continuation?
A continuation is a resumption of trending price action following consolidation. In other words, it is when an uptrend or downtrend continues. They are a fundamental aspect of price action that are present in all markets, and therefore a crucial concept for traders to understand.
For a textbook continuation, price must be in a period of consolidation beforehand. Essentially, a consolidation is a temporary pause in trending movement. They are generally characterized by price fluctuating within a range.
When price breaks out of that range in the direction of the pre-existing uptrend or downtrend, you have a continuation.
However, fake outs are a common occurrence so you shouldn’t label it a continuation immediately after the range is broken. Instead, you need criteria to confirm it. There are various things traders may look for as confirmation.
Developing the ability to recognize continuation is a crucial trading skill.