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What is a flag pattern?

Flag: A flag is a small rectangle pattern that slopes against the previous trend. If the previous move was up, then the flag would slope down. If the move was down, then the flag would slope up.

What are continuation patterns?

Continuation patterns can be seen on all time frames, from a tick chart to a daily or weekly chart. Common continuation patterns include triangles, flags, pennants, and rectangles . Continuation patterns organize the price action a trader is observing in a way that allows them to execute a plan to take advantage of the movements.

How do you know if a pennant is a continuation pattern?

Sharp Move: To be considered a continuation pattern, there should be evidence of a prior trend. Flags and pennants require evidence of a sharp advance or decline on heavy volume. These moves usually occur on heavy volume and can contain gaps.

What is a flag formation?

The formation usually occurs after a strong trending move that can contain gaps (this move is known as the mast or pole of the flag) where the flag represents a relatively short period of indecision. The pattern usually forms at the midpoint of a full swing and consolidates the prior move.

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