BULLISH FLAG PRICE ACTION
This chart pattern starts forming with bulls already in control of the exchange rate's sharp uptrend. When bears enter the market, trading is contained briefly in a down-sloped range. Bulls then break that range's upper resistance, and the exchange rate continues its uptrend.
Let's break down the pattern formation!
A sharp upwards price action is initiated from (1) till it finds the first resistance (2), creating the flag's pole.
Price action reverses direction from the first resistance (2) and starts forming lower highs and lower lows in a narrow flag-like formation, till it finds the lowest support in that formation at point (3)
The pattern is completed when price action reverses direction from the lowest support (3) and goes upwards till it breaks the flag's upper border at point (4)
Entry: after breaking the flag's upper border at point (4)
Take profit: identified by measuring the flag's pole height, which is the vertical distance between points (1) and (2), that measurement is then applied from the breakout rate (4)
Stop loss: the flag's lowest low (3)
This chart pattern starts forming with bulls already in control of the exchange rate's sharp uptrend. When bears enter the market, trading is contained briefly in a down-sloped range. Bulls then break that range's upper resistance, and the exchange rate continues its uptrend.
Let's break down the pattern formation!
A sharp upwards price action is initiated from (1) till it finds the first resistance (2), creating the flag's pole.
Price action reverses direction from the first resistance (2) and starts forming lower highs and lower lows in a narrow flag-like formation, till it finds the lowest support in that formation at point (3)
The pattern is completed when price action reverses direction from the lowest support (3) and goes upwards till it breaks the flag's upper border at point (4)
Entry: after breaking the flag's upper border at point (4)
Take profit: identified by measuring the flag's pole height, which is the vertical distance between points (1) and (2), that measurement is then applied from the breakout rate (4)
Stop loss: the flag's lowest low (3)