Bearish continuation Flag indicating Gold Fall towards 2665 $Short Entry Zone 2710-2700 Future contract
Profit taking zone 2665
Stop Loss( Risk 5% of equity) recommended because in this zone I prefer averaging trade with Max risk of 5% of equity
Bearish flag formation which indicate heavy price fall.
A **bearish continuation flag** is a technical chart pattern often observed in financial markets, indicating the potential continuation of a downward price trend. Here's a breakdown of the pattern:
Components of a Bearish Flag:
1. **Preceding Downtrend (Flagpole)**
- A sharp, steep decline in price that forms the "flagpole."
- Represents strong selling pressure.
2. **Consolidation Phase (Flag)**
- Following the decline, the price consolidates in a relatively narrow range.
- This consolidation typically takes the form of a small, upward-sloping rectangle or channel, showing a temporary pause in the trend.
3. **Breakout to the Downside**
- The pattern is confirmed when the price breaks below the lower boundary of the flag, resuming the downtrend.
- The breakout is often accompanied by increased trading volume.
Characteristics:
- **Trend Direction**: Continuation of a bearish trend.
- **Volume**: Declines during the consolidation phase and increases on the breakout.
- **Duration**: Flags are generally short-term patterns, lasting a few days to a few weeks.
- **Measured Move**: The expected price drop after the breakout is often equal to the length of the flagpole projected downward from the breakout point.
Trading the Pattern:
1. **Entry**: Enter a short position once the price breaks below the flag's lower boundary.
2. **Stop-Loss**: Place a stop-loss above the upper boundary of the flag to limit risk.
3. **Target**: Use the length of the flagpole to estimate the target price for the trade.
Example in a Chart:
Visualize a steep price drop, followed by a slight upward or sideways drift resembling a "flag," and then another drop once the price breaks below the flag's support.
