Today we will continue to discuss the patterns of technical analysis. We will consider the “Flag” pattern what indicates the continuation of the trend. Probably, many of you guess why this pattern is named so.
Now on the chart we see an uptrend “AC”, then the correction of the trend “ab”. Connect the highs and lows of the “ab” correction line. Look at the ACDEB figure. Doesn’t it look like a flag?
Point “D” is a buy signal. You need to be careful, because the price can test this level before continuing the trend.
This pattern is often formed in the middle of the trend line. Therefore, to determine the length of a new trend segment, we can set:
The line of the new trend continuation “DF “can be equal to the segment of the trend “AC” before the correction “ab”.
Point “F” is a sell signal. At this point, we must remember that the other traders see this pattern on the chart as well as you. It would be safer to close your position before point “F”.
The “Flag” pattern can be on the chart in a downtrend. Then it will be an inverted flag. In a downtrend, this pattern is formed faster. In this case, the “Flag” pattern will indicate an opportunity to earn on a downtrend.
As part of the independent work, find this pattern on the price chart of the trading terminal at BitSeven platform on www.bitseven.com. Compare the signals of these patterns with the signals of trend indicators and oscillators available in the window of the trading terminal “Leverage Trading” at BitSeven platform.