Trend Continuation Pattern
Bullish Flag Chart Pattern: Tata Chemicals
Description:
The flag represents a brief pause in a dynamic market move & one of the requirements for a flag pattern is that it should proceed by a sharp and almost straight-line move.
It represents situations where a step advance or decline has gotten ahead of itself, and where the market pauses briefly to "catch its breath" before running off again in the same direction.
Construction of Flag & Pole pattern:
The flag resembles a parallelogram or rectangle market by two parallel trendlines that tend to slope against the prevailing trend.
The flag usually occurs after a sharp move & represents a brief pause in the trend.
The flag should slope against the trend. Volume should dry up during the formation & built again on the breakout.
How to trade flag and pole patterns:
The sideways period is often followed by another sharp rise. This is where the trading opportunity comes in. Once the flag pole and a flag or have formed, traders watch for the price to breakout above the upper flag/trend line. When this occurs, enter a long trade.
Conclusion:
1-Flag patterns are a commonly used technical analysis tool and majorly a choice of breakout traders and swing traders.
2- Flag is formed when there is a minor profit booking in either an uptrend or a downtrend.
3- The pole is formed by a line that represents the primary trend in the market.
4- It is important that flags are preceded by a sharp advance or decline.
Description:
The flag represents a brief pause in a dynamic market move & one of the requirements for a flag pattern is that it should proceed by a sharp and almost straight-line move.
It represents situations where a step advance or decline has gotten ahead of itself, and where the market pauses briefly to "catch its breath" before running off again in the same direction.
Construction of Flag & Pole pattern:
The flag resembles a parallelogram or rectangle market by two parallel trendlines that tend to slope against the prevailing trend.
The flag usually occurs after a sharp move & represents a brief pause in the trend.
The flag should slope against the trend. Volume should dry up during the formation & built again on the breakout.
How to trade flag and pole patterns:
The sideways period is often followed by another sharp rise. This is where the trading opportunity comes in. Once the flag pole and a flag or have formed, traders watch for the price to breakout above the upper flag/trend line. When this occurs, enter a long trade.
Conclusion:
1-Flag patterns are a commonly used technical analysis tool and majorly a choice of breakout traders and swing traders.
2- Flag is formed when there is a minor profit booking in either an uptrend or a downtrend.
3- The pole is formed by a line that represents the primary trend in the market.
4- It is important that flags are preceded by a sharp advance or decline.
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