We have two flags in trading:
First: Horizontal flags (Trading Range). These flags are the strongest type of flag. Horizontal flags indicate that the opposite side of the trend is incapable of creating a highs/lows opposite trend.
Second: Flag with minor highs/lows. This type of flag is weaker than the first one. The opposite side of the trend was able to create the opposite highs/lows (Minor highs/lows).
Flags Tips:
1) Before trading with flags, always check out the trend before them. Trends must be strong so the possibility of flag breakout increases.
2) After checking the trend before flag, check out the candles within flags. Less than 20 bars in Horizontal flags is acceptable but more than 20 bars make the market Neutral with 50-50 chance of breakout. Also in flags with minor highs/lows you have to check the latest major high/low and the opposite side must not reach that major high/low otherwise trend may be reversed.
According to the points mentioned about flags, we examine the bitcoin chart:
If we zoom out on the chart, we see a large trading range that we have already had a strong uptrend. This range is an ascending flag but has more than 20 candelabra, which indicates that both sides of the market are active.
Within this range, a tight downtrend channel has formed over the past few weeks. It is true that we do not have a downtrend before this channel, but we consider it an ascending flag and expect it to break upwards.
First: Horizontal flags (Trading Range). These flags are the strongest type of flag. Horizontal flags indicate that the opposite side of the trend is incapable of creating a highs/lows opposite trend.
Second: Flag with minor highs/lows. This type of flag is weaker than the first one. The opposite side of the trend was able to create the opposite highs/lows (Minor highs/lows).
Flags Tips:
1) Before trading with flags, always check out the trend before them. Trends must be strong so the possibility of flag breakout increases.
2) After checking the trend before flag, check out the candles within flags. Less than 20 bars in Horizontal flags is acceptable but more than 20 bars make the market Neutral with 50-50 chance of breakout. Also in flags with minor highs/lows you have to check the latest major high/low and the opposite side must not reach that major high/low otherwise trend may be reversed.
According to the points mentioned about flags, we examine the bitcoin chart:
Within this range, a tight downtrend channel has formed over the past few weeks. It is true that we do not have a downtrend before this channel, but we consider it an ascending flag and expect it to break upwards.
