Flag is a minor and short-term trend continuation pattern indicating the previous direction which will prevail after its formation.
Flag is formed within a week. It comprises two trendlines: support and resistance levels, which represent the range between high and low prices, visually forming a parallelogram or a flag. The formation of the given pattern implies that the price may change at the same direction as it was going prior to the pattern. This pattern determines the direction of trend movement by price breaking:
In case of an uptrend:
T = BP + (PS – TS)
Where:
T – target price;
BP – breakthrough point;
TS – trend start point;
PS – pattern start point.
Flag is formed within a week. It comprises two trendlines: support and resistance levels, which represent the range between high and low prices, visually forming a parallelogram or a flag. The formation of the given pattern implies that the price may change at the same direction as it was going prior to the pattern. This pattern determines the direction of trend movement by price breaking:
In case of an uptrend:
T = BP + (PS – TS)
Where:
T – target price;
BP – breakthrough point;
TS – trend start point;
PS – pattern start point.