EVERYTHING ABOUT FOREX
The flag is another continuation pattern which is used to show uptrend price changes and impulsive corrective price actions. Flags result from price fluctuations within a narrow range and mark a consolidation before the previous move resumes. They are typically seen right after a big, quick move. The market then usually takes off again in the same direction.
A Flag (Bullish) is considered a bullish signal, indicating that the current uptrend may continue. Flags usually slope in the opposite direction of the main trend. These patterns are usually preceded by a sharp advance or decline with heavy volume. A Flag (Bearish) is considered a bearish signal, indicating that the current downtrend may continue. Flags may look like an upside down flag post, in this case these patterns are called reversed flag patterns. They are frequently observed in an uptrend.
Flag patterns are mostly found in a downtrend and preceded by the breakaway gaps. As mentioned above, flags are reversal continuation patterns, they indicate a slowdown in price movements. The best way to properly use flags is to wait until a triangle is broken out.
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