Forex flag pattern
Flags can be used to analyze the foreign exchange rate or Forex. Flags may appear both in up and down trends and it indicates a continuation of the trend to be likely.
Types of flags
- Bullish flag
- Bearish flag
How to recognize a flag?
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- A flag is always symmetrical, you could draw two straight lines along the flag.
- A flag always moves in the opposite direction of the trend.
- The flagpole is longer than the flag itself!
In addition to the flags there are also channels. Channels have the same characteristics as flags. The price is stuck between two horizontal levels for a longer period. Normally, the trend will continue at the end of the channel.
A channel can be seen as a consolidation, it reflects a moment of indecisiveness among traders and investors. Channels may appear both in uptrends and downtrends.