When the trend is paused, is it an opportunity or a trap? Let the “continuation mode” teach you how to make decisions

In the trading market, trend trading has always been the core strategy pursued by most traders. Market prices do not run straight, but show a rhythm of ups and downs and fluctuations. Among them, the short-term consolidation or oscillation pattern that appears during the trend process often hides the signal of the next wave of trend continuation. This is what we often call Continuation mode (Continuation)
Pattern).

The continuation model is not only a technical phenomenon in the graph, but also an important reference for traders to find low-risk entry and increase positions in actual operations. Understanding and mastering the continuation model can make your trading more stable and effectively reduce the risk of being “washed” by trend fluctuations.

1. What is the continuation mode?

Continuation mode refers to the short-term consolidation pattern in the existing trend. After sorting, the price is likely to continue to operate in the original trend direction.

In layman’s terms, it is like the market taking a short break when it is “climbing up” or “downhill”, digesting the previous rise and fall, and then continuing in the original direction. It tells traders: the trend is not over, and waiting patiently or making timely arrangements can often obtain better entry points.

In trading practice, the existence of the continuation model reminds us not to rush to chase highs or shorts, but to observe the performance of the price in the consolidation range. An effective continuation model is usually accompanied by the contraction of trading volume and the accumulation of market momentum. Once the consolidation range is broken, the probability of trend continuing is higher.

2. Common continuation modes and operating techniques

1. Flag shape (Flag)

The flag shape usually appears after a strong rise or fall, is a short and parallel channel, and the tilt direction is usually opposite to the original trend.

Operation ideas: Wait for the flag shape to be sorted out and break through with the trend. Choose near the breakout point at the entry point, and set the stop loss outside the reverse boundary of the flag shape.

Trader experience: In high volatility, the flag shape can help you avoid chasing highs or blindly increasing positions, providing a safer entry window.

2. Triangle

Triangles include rising triangles, falling triangles and symmetric triangles, and the price gradually shrinks the amplitude within the convergence interval.

Operational ideas: Observe the breakthrough direction and generally continue along the original trend. After confirming the breakthrough, you can increase your position or establish a position as the trend.

Practical tips: Trading volume is often breaking throughIt falls before and amplifies when breaking through, as an effective auxiliary indicator for the entry signal.

3. Wedge

Wedge is a consolidation pattern with inclined convergence. Price fluctuates in the oblique channel and accumulates trend momentum in advance.

Operational idea: operate in the direction of the wedge in the trend, and if it breaks through the opposite direction, stop loss in time.

Psychological tips: Wedge-shaped breakthroughs usually have a certain “explosion force”. Traders should set stop loss in advance to avoid being washed by sudden fluctuations.

4. Rectangle/Case Organization (Rectangle/Range)

Rectangle Organization is a pattern in which prices fluctuate up and down within the horizontal range, and usually occurs during the trend or in the consolidation stage.

Operation ideas: If the price breaks through the high point of the range, go long with the trend, and if the price falls below the low point of the range, go short with the trend.

Trader experience: Rectangular arrangement gives traders the opportunity to observe market trends many times, and can also use the high and low points of the range to perform band operations.

3. Trading value of the continuation model

Low-risk entry

The continuation model provides a “safe point” in the trend, allowing traders to find low-risk position building opportunities in a pullback or oscillation.

Opportunity for increasing positions

For traders who already have positions, the continuous model breakthrough provides a signal to increase positions with the trend, which helps improve position efficiency and capital utilization.

Risk Management

When the continuation mode fails, the breakthrough direction is the opposite of the original trend, which means that the trend may reverse and is an important reference for stop loss or reduction of positions.

Trend Confirmation

After the continuation model is completed, the probability of the market continuing the original trend is relatively high, providing an important basis for traders to judge the strength of the trend.

Practical operation skills

Combined with trading volume, breakouts are judged: the amplification of the trading volume in the breakthrough direction in the continuation mode is an important signal for the continuation of the trend.

Multi-level trend analysis: Continuation mode is more reliable in daily or 4-hour charts, and senior traders usually make judgments based on higher cyclical trends.

Psychological Patience: Traders should learn to wait for the finishing to finish, rather than blindly following short-term fluctuations.

Stop loss settings: Although the continuation mode has a high probability of following the trend, the market may experience false breakthroughs, and stop loss is indispensable.

Trading continuation model is not only a technical analysis tool, but also tests the psychological quality of traders: can we wait patiently for the trend to be sorted out; can we enter the market decisively when the breakthrough is confirmed; can we strictly stop losses when the breakthrough fails?

Proficient in mastering itTraders who continue the model not only have technical advantages, but also are more calm psychologically and can move forward steadily in the market fluctuations. In trading, the trend may be temporarily suspended, but those who know how to use the continuation model can often find opportunities in sorting out and let fluctuations create value for themselves.