Continuation candlestick patterns are powerful technical analysis tools that help traders forecast trend continuation. These Japanese candlestick patterns indicate investor sentiment and market momentum, making them valuable for identifying high-probability trade setups.

According to market researcher Thomas Bulkowski, the best continuation patterns show success rates of 63% to 80%. However, only 6% of all continuing patterns achieve "investment-grade" reliability (66%+ success rate). Effective trading requires proper pattern identification and technical indicator confirmation.

Practice with ThinkMarkets' demo account allows risk-free strategy testing. ThinkTrader provides advanced tools designed for continuation pattern trading.

What you'll gain from this article:

Insight into the most reliable continuation candlestick patterns
Understanding of context and market dynamics for candlestick pattern continuation
Practical continuation candlestick trading strategies with confirmation tools
Effective risk management techniques based on pattern reliability and failure rates
Tips on timing and execution to get the most out of your performance

What are continuation candlestick patterns?

Continuation candlestick patterns are price formations signalling that a prevailing trend will likely continue after a brief consolidation. They represent pauses before trend continuation, not trend reversals. Bullish candlestick patterns break to the upside while strong bearish candlestick patterns break to the downside.

Bulkowski's research shows that reversal candlestick patterns perform better than continuation candle patterns (59% vs. 41%), even though continuations follow existing trends. Only 24% of candle combinations perform better than random (60% of the time). In continuations, trends lose steam and don't extend far beyond entry points. In reversals, traders enter the new direction and make longer moves.

Continuation patterns form when markets need equilibrium to build the next trend leg. Traders use them in trend analysis and momentum trading to identify entry points or add to existing positions.

Are continuation candlestick and chart patterns the same?

Continuation candlestick patterns differ from continuation chart patterns. Candlestick patterns use single candle combinations for short-term signals, while chart patterns analyse broader geometric shapes. However, chart patterns may contain candlestick patterns for immediate trend analysis.

Chart patterns like triangles, flags, and pennants validate broader trend analysis aspects. Flags and pennants are short congestions after steep trends. Triangles are longer-term, five-wave consolidation patterns that typically resolve in the existing trend direction.

continuation patterns in forex (thinkmarkets)

Continuation chart patterns and candlestick patterns differ

Three top continuation candlestick patterns in bull and bear markets

Here are some examples and explanations of the top continuation candlestick patterns traders can use in both bull and bear markets, according to Bulkowski. Understanding the continuation candlesticks structure is key to using them effectively.

Rising and Falling Three methods

Three-method formation patterns predict the continuation of a current trend, either bearish or bullish, after a bearish or bullish reversal. Bulkowski scores the bullish and bearish continuation candlestick patterns at 74% and 79%.

continuation patterns trading (thinkmarkets)

Rising three and falling three methods candle pattern

The bullish pattern is called the rising three methods candlestick pattern. The formation is characterised by a long bullish candle, followed by three small bearish candlesticks, all within the price range of the first candlestick. The pattern is completed by a long top bullish candlestick that closes above the first one and shows buyers regaining control after a brief consolidation.

The opposite is true for the bearish pattern, called the falling three methods candlestick pattern. The first bearish candle is long, followed by three short bullish candlesticks, also bounded by the range of the first candlestick. The pattern is completed with a long bearish candlestick that closes below the opening level of the first candlestick, indicating the bulls lack sufficient strength to reverse the trend.

Bullish and bearish Deliberation patterns

The bullish deliberation candlestick pattern is supposed to act as a bearish reversal pattern, but Bullkowski's statistics show that it most often acts as a bullish candlestick continuation pattern. It’s a three-candle formation and signals a brief pause before the uptrend continues, scoring as high as 77% (bullish) and 76% (bearish).

Deliberation candle pattern (thinkmarkets)

Bullish and bearish Deliberation candlestick pattern

The first two candles show strong bullish momentum, while the third is smaller and opens near the close of the second candle. This small bullish candle indicates a short period of consolidation, as traders take a moment to evaluate the market. The pattern works best when it follows a significant price surge. The opposite is valid for the bearish Deliberation pattern.

Bullish and bearish Mat Hold patterns

The Mat Hold patterns stand out from typical continuation candlestick formations because they focus on the battle between bulls and bears. Bulkowski ranked the bullish continuation pattern Mat Hold at 78% and the bearish continuation pattern Mat Hold at 67%.

bearish and bullish mat hold pattern (thinkmarkets)

Bullish and bearish Mat Hold candlestick pattern

The bullish Mat Hold begins with a large green candle, signalling powerful buying momentum. Then, a smaller, 3-candle bearish pattern appears, reflecting a brief pullback as the bears try to regain control. Eventually, the pattern finishes with another large bullish candle that covers the body of the third candle entirely. This shows that the bulls have regained control after the short-lived pullback.

The bearish continuation Mat Hold pattern starts with a long red candle extending the downtrend. The next three candles are white or green, introducing buying pressure. However, none of these candles fully engulf the range of the first bearish candle, showing the persistent power of the bears. The fifth and final candle is a long bearish candle that breaks the pattern low and closes near the lows, indicating the bears have overwhelmed the bulls.

Despite their high success rate in both bull and bear markets, the top continuation patterns do not necessarily produce a high reliability score. Let’s dive into a more detailed analysis to understand which continuation patterns are more reliable in bullish and bearish markets.

Curious about other types of candlestick patterns and what they signal? Read more here!

What are the most reliable bullish continuation patterns?

Through his backtests, Bulkowski identified a number of bullish continuation patterns that show consistency.

bullish breakout patterns (thinkmarkets)

Top bullish candlestick patterns for trend continuation

Not all of the bullish continuation candlestick patterns should be treated equally.

Bullish Mat Hold: With a strong 78% success rate, this uptrend continuation pattern typically signals that an ongoing bullish trend might continue after a brief consolidation. However, this is based on fewer than 100 samples, a very small trading sample to consider reliable.

Bullish Deliberation: This pattern shows a 77% success rate. It reflects a period of hesitation in the price movement, but generally leads to a trend continuation.

Bullish Concealing Baby Swallow: Noted for a 75% success rate based on fewer than ~100 samples, this pattern is less common but remains a reliable trend indicator of continued upward momentum.

Rising Three Methods: Also backed by a sample size of fewer than 100 occurrences, this pattern maintains a solid 74% success rate. It is characterised by a brief downtrend within an overall rising price movement.

Bullish Separating Lines: Slightly lower but still meaningful, the Separating Lines (bullish variant) pattern shows a 72% success rate, reinforcing its value as a trend continuation indicator.

Only the Bullish Deliberation and Separating Lines are worth adding to a trader's arsenal due to adequate sample sizes and reliability.

What are the most reliable bearish continuation patterns?

Some bearish continuation patterns stand out due to their relatively high success rates as downtrend continuation patterns. But similar to the bullish continuation candlestick patterns, only a few of them have a good sample of trades over 100:

bearish breakout patterns (thinkmarkets)

Top bearish candlestick patterns for trend continuation

Bearish Kicking: This pattern has a success rate of around 80%, suggesting a high chance of a downtrend continuation. However, the reliability of this pattern is affected by the fewer than 100 trading samples.

Rising Three Methods: With a success rate of about 79%, the Rising Three Methods pattern is another reliable indicator of continued bearish price action. Similar to the Kicking Bearish pattern, scores are drawn from a sample of under 100 trades, warranting cautiousness.

Bearish Separating Lines: This pattern has a win rate of 76%, suggesting a fairly consistent ability to predict that a downtrend will persist. This pattern's sample size is larger than the previous two, lending more confidence to its reliability as a bearish continuation signal.

Bearish Deliberation: This pattern shows a 75% success rate and serves as a reliable, though somewhat less common, signal that the downtrend will continue. Its solid statistics make it a useful continuation candle pattern for traders in stocks and forex.

13 New Price Lines: This relatively rare candlestick pattern has a 74% success rate, though it's based on under 100 occurrences. However, the pattern helps traders anticipate bearish trend continuations.

Only Bearish Separating Lines and Deliberation are reliable continuation signals based on Bulkowski's statistics.

Bullish vs. bearish continuation patterns: Which is better?

Counterintuitively, 96% of continuation patterns perform better in bear markets than bull markets, while only 4% perform better in bull markets. This suggests bearish conditions create more favourable dynamics for continuation signals due to increased volatility and trader psychology.

According to Bulkowski's standards (66%+ success rate with frequent occurrence), patterns that qualify as "investment grade" show that the Deliberation pattern stands out because it performs consistently well in both bull and bear markets. Most other patterns, on the other hand, do better in bear markets.

bullish and bearish candlestick patterns explained with examples (thinkmarkets)

Bullish vs. bearish continuation patterns and how they perform

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Best technical indicators for different types of continuation patterns

Identifying continuation patterns alone isn't sufficient. Traders use them with technical indicators to filter and confirm their trades.

Using the 50-day moving average as a trend filter

The 50-day moving average (MA) shows market trends, which help you figure out if conditions are bullish or bearish. About 86% of the time, breakouts from continuation patterns below the 50-day MA do well.

Volume indicator to confirm the strength of the breakout

Volume shows how strong the price movement is:

Breakout volume: Heavy volume during breakouts works about 91% of the time.
Volume trend: When volume rises during formation, it means stronger moves.
Average volume: Above-average volume patterns win 58% of the time, while below-average patterns win 42% of the time.

Using a 50-day MA, volume analysis, and continuation patterns together makes it easier to find good risk-reward opportunities.

How to trade continuation candlestick patterns effectively?

Bulkowski's empirical research provides clear guidelines for maximising continuation pattern performance:

bearish and bullish candle trading (thinkmarkets)

How to trade trend continuation candlestick patterns

Step 1: Select tall types of candlestick patterns with long shadows

Patterns with greater height (from highest high to lowest low) perform better most of the time.
Tall bodies indicate strong momentum in the prevailing trend direction.
Long shadows reflect price volatility and market indecision, signalling the market is ready to push further once the pattern completes.

Step 2: Focus (ideally) below the 50-day MA

Breakouts below the 50-day MA usually do better.
This method helps confirm the overall bearish context for downtrend continuation.
Look for bullish patterns that are forming above the 50-day MA.

Step 3: Look near yearly lows

Chart patterns developing close to yearly lows often perform better than expected.
These areas usually act as key support levels where traders anticipate trend movement.
Patterns near these levels provide better entry signals with favourable risk-to-reward setups.

Step 4: Wait for heavy breakout volume

A surge in volume during a breakout demonstrates firm market conviction.
Higher volume reduces the risk of false signals.
Ensures the breakout has sufficient strength to sustain momentum.

Step 5: Confirm with opening gaps

Patterns breaking out with opening gaps perform better 82% of the time.
Gaps confirm traders' sentiment and commitment to the move.
Increases confidence in maintaining the position.

Step 6: Implement false breakout protection

Wait for the price to move at least 30% of the pattern's height beyond the breakout point.
Set stop losses beyond pattern boundaries (31% of patterns fail).
Wait for the candle to close beyond the breakout levels.
Use secondary indicators (RSI, MACD) to confirm and avoid whipsaws.

Trend continuation candlestick patterns on longer timeframes like the daily or weekly charts are more reliable than intraday ones, according to Bullkowski. Additionally, they tend to be most effective when they develop within two weeks, with breakouts happening within three days following the completion of the pattern.

Trading strategy example using candlestick continuation patterns

Below is a real-world Apple (AAPL) stock trading example that combines insights from Thomas Bulkowski's studies and our six-step methodology on candlestick continuation patterns.

Apple candlestick cart

Rising Three Methods Trading Strategy (thinkmarkets)

Rising Three Methods on AAPL, daily candlestick chart

Following our systematic approach, we identified a tall Rising Three Methods pattern on AAPL's daily chart above the 50-day MA.

The pattern fulfilled all steps (caveat: it’s a bullish trend, so prices traded above the 50-day MA, which leads to a statistically lower return per trade than when the price is below the MA). A stop loss was placed below the pattern's lowest point, and we waited for a 30% move of the pattern’s height beyond the breakout point to protect against false breakouts.

Trade execution:

Entry: Above the high of the first candle, confirmed by heavy volume and gap opening.
Stop-loss: Placed below the pattern's lowest point (accounting for the 31% failure rate).
Take-profit: Used the pattern's height as a measured move target.

This 6-step approach combines pattern identification with Bulkowski's statistical insights into a structured, practical trading strategy.

Risk management tips for trading continuation patterns

To trade continuation patterns, you need to be able to control risk and accurately identify the direction of the trend. Even "investment grade" patterns need clear exit conditions.

1. Treat position size based on pattern reliability

The size of the position should be based on how well the pattern works. Patterns that perform 66% of the time or more merit bigger allocations (2–3%), while those that don't perform as well deserve less exposure (1–2%). This method helps you get through losing streaks without much damage to your account.

2. Consider the sample size before entering

Be careful with patterns that only have a few examples to back them up. Mat Hold's 78% success rate comes from a small number of trades, which means that the positions need to be smaller. In the same way, Kicking Bearish's 80% rate needs careful trading until a lot of data backs it up.

3. Use candlestick pattern statistics for stops

Placement of strategic stop-losses should be based on performance studies. According to Bulkowski's research, 31% of continuation patterns don't work. Setting stops based on failure rates can help keep losses to a minimum and stop small losses from turning into large ones.

4. Measure take profit and evaluate risk:reward

Use pattern height for profit targets based on Bulkowski's study of 1.2 million candle lines across 500 stocks. Risk-reward ratio consideration helps judge whether potential gains justify possible losses, basing decisions on evidence rather than intuition.

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Conclusion

Continuation candlestick patterns show price trends respites before they resume. They do this by revealing entry points through short consolidations with tall candles and long shadows. Bulkowski found that some patterns can be 78% accurate, but only a few achieve institutional grade.

Real-world testing and historical data outweigh theory or backtesting. Continuation patterns work better in bear markets, challenging common beliefs and highlighting market context. Volume analysis, especially breakout volume, is the most critical confirmation indicator.

Remember that continuation candlestick patterns should complement other technical analysis forms for trend continuation confirmation. Check ThinkMarkets' Academy to learn more about technical analysis and candlesticks.

Technical analysis