Continuation patterns in forex refer to chart patterns that suggest a temporary consolidation or pause in the prevailing trend before the price resumes its prior direction. Traders use these patterns to anticipate the continuation of an existing trend, helping them make informed decisions about entering or exiting positions.

Common continuation patterns include flags, pennants, and rectangles. Flags and pennants typically occur after a strong price movement, forming a rectangular-shaped consolidation before the trend resumes. Rectangles, on the other hand, are characterized by horizontal lines that represent a period of consolidation between support and resistance levels.

Identifying continuation patterns involves recognizing the visual cues presented by the price action on a forex chart. Traders often look for decreasing volatility and a decrease in trading volume during the consolidation phase, signaling a potential breakout in the direction of the prevailing trend.

Successfully interpreting continuation patterns can provide traders with valuable insights into market sentiment and potential future price movements. However, like any technical analysis tool, traders need to combine pattern recognition with other indicators and risk management strategies for a comprehensive approach to decision-making in the dynamic forex market.