![]() Once the market breaks down, the best time for you to trade the Flag pattern is on the first pullback. Let’s say the market is in a Range and then it breaks down. When should you Trade the Flag Pattern?įrom my experience, there are two times when you should trade the Flag pattern. The end of this distance should make your Target 2. This means that to get the Target 2, you must measure the vertical distance between the high and the low of the Flag Pole.Īfter getting the distance, apply it to the pattern.Īgain, just as we did with Target 1, this distance should be applied from the start of the breakout point. The next target of the Flag chart is equal to the size of the Flag Pole. Later in this article, you’ll see how you should shift the stop loss after attaining these targets. The end of this distance should make your first target. You can then apply this distance from the breakout point. You can measure the Flag size by taking the vertical distance between the upper and the lower channel within a flag. ![]() The measured move target is a distance that is equal to the Flag size. Once a Flag pattern has been confirmed, you can derive the first target using the measured move technique. These are shown in the following graphic… This means that a valid Flag pattern is most likely to push the price action further in the same direction as the Flag Pole.Īgain, after seeing a Flag formation on your price chart, you will be able to measure the approximate price target on the formation. The Flag pattern has a continuation potential on the chart. The Flag is angled contrary to the trend impulse that creates the pole. The price action also brings a corrective character on the graph. The Flag has a price action with evenly distributed tops and bottoms. Once the Flag Pole has been formed, a valid Flag pattern begins to trade within a tight range, forming the shape of a flag. This is followed by a brief consolidation which takes on the appearance of a Flag. The Flag Pole is the first component of the Flag Chart Pattern.Īny trending move can transition into a flag, meaning that every trend impulse can appear to be a Flag pole.Īs the Flag pattern emerges, you will see a large impulse move, commonly known as the Flag Pole. It is easy for you to recognize this pattern once you know what to look for. If you look at the graphic, it looks like a Flag, just like its name. The black channel in the graphic is the Flag. The red line in the above graphic is the Flag Pole. The following graphic shows these parts clearly… ![]() The flag pattern is made up of two parts namely… That’s what you’re about to learn! Structure of the Flag Pattern Now, it will be good for you to know the parts of the Flag pattern. If the price action is bullish, the Flag is formed in a bearish direction.Īnd if the price action is bearish, the Flag is formed in a bullish direction. The small candles are an indication that the pullback is weak. These are in a form of a correction directed upwards. The black lines indicate where the bear flag pattern is formed. The chart shows that there is a strong trending move downwards. This shows that the trend is very strong in a bullish direction.Ī bearish flag pattern is just the opposite of the above… Note that this is the case with the candles both before and after the Flag. They have larger bodies compared to the ones in the Flag. However, this is not the case with the candles that surround the Flag. The candles in the pullback are small, showing that the pullback is weak. This forms what we call the bullish flag pattern. The above chart shows that there is a strong trending move which is followed by a weak pullback. Here are the two criteria that can help you identify the Flag pattern…ġ-A strong trending move, normally shown by large body candles.Ģ-The above is followed by a weak pullback, normally shown by small-bodied candles. Whenever you see this pattern form on a chart, it means that there are high chances of the price action breaking out in the direction of the prevailing trend. It is an on-chart figure that appears as a minor consolidation between impulsive legs of a trend. The flag pattern is a well-known continuation formation in trading. In this article, I will teach you how to trade the Flag pattern. However, you can easily fix this problem. The market only moved higher without you… You waited for a pullback that never came… You must have found yourself in this situation… The Flag pattern is a great chart pattern that you MUST add to your forex trading arsenal!
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