Until about 2 weeks ago, I never used this pattern. I was aware of it, but it didn't occur that often that I could take advantage of it. But lately that has changed. Flags are jumping up all over the place like it is a medieval tournament or something. Here is the one from today, took a while to recognize it but after that I only took longs, expecting a breakout upward. Sure enough, eventually it happened... So just keep an eye out for it, it might make you a few bucks...
Is the flag part supposed to trend down, as opposed to just being straight across? What makes the flag aspect special - is it different that there just being an uptrend, followed by a consolidation trend and break out? I'm a rookie here, very curious. Thanks!
Trend down flags are created when successive stops are hit and than price ramps back up, it’s mainly created by breakout players, whose stops fuel the rise back up creating downward regression channel.
Thanks Spectre. When the successive stops are hit, and those of traders that had sold short, so as soon as the price goes up their stops are hit, forcing them to buy, causing the stock underlying to break out to the upside at the end?
How can they be counter trend Handle? Looks like there is a bull flag and a bear flag. In the bull one, market is going up, starts to consolidate/drop a bit, then goes up again, big. In a bear flag it looks like the opposite. So is a flag just a trend, followed by a consolidation/slight reversal, then a breakout in the same direction of the original trend? And when you say steep, you mean the consolidation/slight reversal piece? Best if its steep, as that will make the breakout in the opposite direction (thus in the direction of the original trend) more likely/bigger? Thanks!