Here we have a valid pattern on FX:GBPUSD and currently we are just waiting for a breakout to the upside. Flag patterns are also consolidation patterns, just like any other ( , bat, , , ). This pattern is usually formed after a strong movement in price action. There are 3 main parts to this pattern: the flag pole, flag portion, and the continuation portion. After a strong movement, a buying in this case, the market starts to consolidate and we expect the market to breakout in the direction of the flag pole, in our case to the upside.
After getting the breakout, the target is equal to the length of the flag pole, which is 219 pips for this setup. Also a key point to keep in mind is that, the longer the market stays within the consolidation zone (flag portion), the stronger the breakout to the upside will be. The invalidation point for this is when we get a break AND close below the bottom falling of the flag portion. Also note that this setup has formed within the retracement from the previous Lower Low Lower Close. See the chart above for more details.
NOTE #1: Partial profits can be taken at either of the 3 Fib extension levels, labelled on the chart above !!!
NOTE #2: also formed on the !!!
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