The flag and pennant patterns appear on price charts quite often. The flag is considered the most reliable pattern in technical analysis. It is a continuation pattern serving as a consolidation period after sharp changes.
A flag appears when market participants need a sort of a break after bears fix their profits, followed by bulls or vice versa. Of course, they cannot cash in profits simultaneously; that is why a short opposite trend appears. A flag is usually directed in the same way as the trend that dominated when the pattern appeared. A breakout in one direction or another is a sign of uptrend or downtrend continuation. However, if the breach direction is opposite to the major trend, you should be ready for a trend reversal.
Bullish flag
The pennant is a short consolidation within the current trend. This pattern’s key feature is that it is formed in the presence of very strong market movements.
A pennant is a short-term pattern with the direction opposite to the major trend. In this case, there is no correction. The flag’s parallel lines converge in the pennant pattern; therefore, it is sometimes mistaken for a triangle. However, unlike the triangle pattern, a pennant forms quickly and has the opposite direction to the major trend, which is not that important. You should pay close attention to the direction of a breakout as it indicates either a trend continuation or its reversal.
Bullish pennant
The rectangle is formed when the price is moving between two parallel lines (support and resistance). Highs and lows are located horizontally.
A rectangle is a pattern indicating a longer price consolidation after a very strong major trend. As a rule, prices exit the rectangle pattern in the same direction they entered it.
Bearish rectangle
To identify continuation patterns, you can use weekly, monthly, and even intraday charts.
The following is true for all the mentioned patterns: the more traders discover a pattern, the more chances there are for market shifts. However, remember that different forex time frames imply different patterns.
In technical analysis, the patterns that point to a short-term correction before the major trend resumes are called continuation patterns.
Traders can prevent opening losing deals if they identify these patterns correctly. Main continuation patterns are the triangle, flag, and pennant. Each pattern is determined by two lines: support and resistance. The first line goes through local lows, and the other covers only local highs. The more highs or lows there are on a line, the clearer a pattern will stand out on a chart.
A flag appears when market participants need a sort of a break after bears fix their profits, followed by bulls or vice versa. Of course, they cannot cash in profits simultaneously; that is why a short opposite trend appears. A flag is usually directed in the same way as the trend that dominated when the pattern appeared. A breakout in one direction or another is a sign of uptrend or downtrend continuation. However, if the breach direction is opposite to the major trend, you should be ready for a trend reversal.
Bullish flag
The pennant is a short consolidation within the current trend. This pattern’s key feature is that it is formed in the presence of very strong market movements.
A pennant is a short-term pattern with the direction opposite to the major trend. In this case, there is no correction. The flag’s parallel lines converge in the pennant pattern; therefore, it is sometimes mistaken for a triangle. However, unlike the triangle pattern, a pennant forms quickly and has the opposite direction to the major trend, which is not that important. You should pay close attention to the direction of a breakout as it indicates either a trend continuation or its reversal.
Bullish pennant
The rectangle is formed when the price is moving between two parallel lines (support and resistance). Highs and lows are located horizontally.
A rectangle is a pattern indicating a longer price consolidation after a very strong major trend. As a rule, prices exit the rectangle pattern in the same direction they entered it.
Bearish rectangle
To identify continuation patterns, you can use weekly, monthly, and even intraday charts.
The following is true for all the mentioned patterns: the more traders discover a pattern, the more chances there are for market shifts. However, remember that different forex time frames imply different patterns.
In technical analysis, the patterns that point to a short-term correction before the major trend resumes are called continuation patterns.
Traders can prevent opening losing deals if they identify these patterns correctly. Main continuation patterns are the triangle, flag, and pennant. Each pattern is determined by two lines: support and resistance. The first line goes through local lows, and the other covers only local highs. The more highs or lows there are on a line, the clearer a pattern will stand out on a chart.
تبصرہ
Расширенный режим Обычный режим