Flow patterns of horizontal oil–water two-phase pipe flow were studied with water holdup fluctuations provided by a set of conductivity and capacitance sensors. The in situ water fraction measured by the combined sensor was calibrated by quick-closing valves. Local wavelet energy (LWE) coefficients were extracted through continuous wavelet decomposition of the phase fraction history. The flow patterns in the horizontal pipe were identified visually and classified as water-continuous flow (oil dispersed in water flow, stratified flow with mixing at the interface, dispersion of oil in water and water flow and dispersion of water in oil, and oil in water flow) and oil-continuous flow (oil and dispersion of oil in water flow, and water dispersed in oil flow). The mechanics of flow behaviors of each flow pattern were interpreted from the LWE coefficient maps. Two features, the normalized LWE coefficient W⁎ and the normalized scale a⁎, were extracted from the LWE coefficient maps to represent changes in flow patterns. Using these two coefficients, the flow pattern transition with superficial flow velocity of water (J w) and oil (J o) was investigated. An overall flow pattern transition is characterized in a W⁎− a⁎ map, where a “triangular” distribution of flow patterns is formed and the flow pattern transition can be characterized with the change in phase fraction and overall flow velocity.