At this point the market has finished consolidating and is now trending in the original direction. Using the distance we calculated above for the flag pole, we now have a measured objective for a possible target. Notice in this example how the continuation is the exact same length as the flag pole. The distance for the flag pole is measured from the swing low to the swing high of the flag pattern. Similarly, we measure from the swing low of the flag pattern to the swing high of the continuation.
In the example below, both represented an equal distance of pips. Furthermore, the flag pole was approximately pips while the continuation only resulted in a pip rally. So while the two were very close in terms of distance traveled, there was a slight difference. Just like the bullish flags above, this bearish flag has a flag pole and continuation that are both equal distances of pips.
I hope this lesson has provided you with a blueprint of what to look for when identifying bullish and bearish flag patterns. For now, just focus on being able to identify these patterns — they occur all the time and can be a powerful asset in your trading toolbox. Bullish and Bearish Flag Patterns. So what exactly is a bullish or bearish flag pattern? Components of a Flag Pattern The flag pole The flag The continuation The illustration above shows a bullish flag pattern.
Let me explain each component in greater detail. The Flag Pole This is the initial move in price. The Flag The flag formation is the key to this pattern. Your Money. Personal Finance. Your Practice. Popular Courses. Part of. Guide to Technical Analysis. Part Of. Key Technical Analysis Concepts.
Getting Started with Technical Analysis. Essential Technical Analysis Strategies. Technical Analysis Patterns. Technical Analysis Indicators. What Is a Flag? Key Takeaways A flag pattern, in technical analysis, is a price chart characterized by a sharp countertrend the flag succeeding a short-lived trend the flag pole. Flag patterns are accompanied by representative volume indicators as well as price action.
Flag patterns signify trend reversals or breakouts after a period of consolidation. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Related Terms Pennant Definition A pennant is a pattern used in technical analysis described by a triangular flag shape that signals a continuation. What Is a Wedge in Technical Analysis? A wedge occurs in trading technical analysis when trend lines drawn above and below a price series chart converge into an arrow shape. Ascending Triangle Definition and Tactics An ascending triangle is a chart pattern used in technical analysis created by a horizontal and rising trendline.
The pattern is considered a continuation pattern, with the breakout from the pattern typically occurring in the direction of the overall trend. What Is a Cup and Handle Pattern? A cup and handle is a bullish technical price pattern that appears in the shape of a handled cup on a price chart. Symmetrical Triangle Definition A symmetrical triangle is a chart pattern characterized by two converging trendlines connecting a series of sequential peaks and troughs.
Bull A bull is an investor who invests in a security expecting the price will rise. Discover what bullish investors look for in stocks and other assets. Partner Links. Related Articles.
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Bullish flags are formations occur when the slope of the channel connecting highs and lows of consolidating prices after a significant move up is parallel. A flag is a relatively rapid chart formation that appears as a small channel after a steep trend, which develops in the opposite direction. After an uptrend, it. Flags are areas of tight consolidation in price action showing a counter-trend move that follows directly after a sharp directional movement in price. The.