In this technical analysis we are reviewing the price action on Ethereum. The confirmed bull flag is a very powerful signal and I will be explaining how you can trade it.
Both flags and Pennants are quite similar to each other and have proven to be powerful chart patterns in technical analysis. They are considered 'continuation patterns'. First of all it is important to understand where the name is coming from.
If you look at the picture to the left you should get a pretty good idea. The price goes up strongly (in case of a bullish pattern, downwards for bearish) and then enters a moment of soft consolidation with a slight bearish trend (or in case of a bear flag it should be bullish, you get the point).
The price is expected to continue in the direction of the move it had seen before (in this case the strong upwards momentum) after it breaks out of the flag. Ethereum has JUST confirmed the breakout on the bull flag, which should indicate a bullish continuation according to this pattern.
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- Trading Guru
-------------------------------------------------------------- Disclaimer! This post does not provide financial advice. It is for educational purposes only!
the lack of volume on the right shoulder gave very little confidence that this was a true breakout. price action is the first indication, we then must take in all other variables to confirm.
cortezcrypto
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it would seem the breakout from the bullish pennant was a false one, we are back well inside the bullish pennant
prefabsprout
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you say short btc and then say eth is bullish. you're all over the place.
Trading-Guru
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@prefabsprout, Hey prefab! Nicely spotted. It is extremely rare for major market cap coins to move without correlation. My trades are often on smaller timeframes such as the 1h. The BTC short scalp was on such a timeframe as well, now I am bullish again:
Cryptestan
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Hello. I found this post quite precise, however, I would like to ask if the slope of the flag could be also upward. Is that also considered a flag?
Furthermore, referring to the book "Technical Analysis by John Murphy" a flag or pennant occurs with a strong green candle at once, but what you have shown is a gradual upward trend of the price. What could be your explanation for this?
Thx and GL ;)
Trading-Guru
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@Cryptestan, Het Cryptostan! Thanks for the comment. I haven't read the book myself yet, would you recommend it? Unfortunately, this idea did not play out very well. However, it can still be a great example using historical data on how to recognize such a pattern. WRT your comment about the strong green candle, that all matters on the timeframe! For instance, if you look at this one on the daily, you can see it's only two candles:
The more you zoom in, the more candles it will have. I still found it to be a very very sharp upwards move and that's why I concluded a bull flag. What do you think of this reasoning? Does it make sense?
Cryptestan
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@Trading-Guru, Thanks dear for your comprehensive answer. First and foremost I would like to recommend you this book since I thunk thats the cornerstone of understanding technical analysis.
About the flag your right. it depends on the time frame good! thanks
Trading-Guru
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I will be posting more of these regularly, so follow me to find out about great trading opportunities and educational content
Trading-Guru
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I would also like to remind you that I make all of this available completely for free. If you like my work, you can help me out greatly by giving me a thumbs up on this idea
Trading-Guru
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I’m curious to hear your thoughts! Let’s make use of the fantastic tradingview community and give each other feedback. This is one of the first educational posts I made. I tried to keep it short and to the point, did you like it?