Figures of technical analysis: "Flag" - continuation of the trend

Technical analysis figure "Flag" occurs frequently on price charts and on almost all timeframes. It can be identified both on the five-minute candles and on the weekly chart.

Figure "Flag" most often occurs after a strong price movement of the selected asset in one direction and represents a narrow consolidation zone, usually in the opposite direction from the initial impulse.

The components of the technical analysis pattern "Flag"

In the "Flag" figure distinguish: "shaft" - the initial price impulse, and the very "flag." - consolidation, a narrow price channel bounded by support and resistance levels. In most cases, the length of the "flag" is a third of the length of the "shaft".

Trading signals of the technical analysis pattern "Flag"

 

Technical analysis figure "Flag" It is quite accurate and requires clear profit taking targets and stop orders. In an upward movement to open a long position (BUY) is worthwhile only after the resistance line is broken and the price exceeds the boundary of the price channel.

The stop order should be placed at the minimum of point C (the lowest point of the correction). We set the target equal to the initial growth - we take as the basis the distance that the price passed to the narrow zone Consolidation. In a bearish trend, the procedure is similar: entry to sell down on a breakdown of the flag, the stop is above point C and the target is equal to the initial price move.

The "Flag" figure is often confused with Vympel" figure, having not parallel straight lines, but tapered ones. However, both data technical analysis figures are continuation figures, so such confusion will not lead to minus in the account.