Modern Forex traders employ a variety of techniques and software solutions to achieve the best results. There are a lot of approaches in Forex, from virtual private servers like MyForexVPS that allow smooth trading to unique price patterns traders can track and use for their benefit. Tracking flag pattern in stocks is a popular method that allows securing better deals. In this article, you will learn more about flag patterns and the ways to interpret them.
What Is a Flag Pattern?
Traders should be able to identify various patterns while analyzing stock market charts. The trading flag pattern is one of the common patterns that can help you determine the strategy and make favorable deals. A stock flag pattern has two types: the bullish flag and the bearish flag. They are similar in shape, but their direction is different. Here is what you can see by looking at the stock chart flag pattern:
- Bull flag chart. The bullish pattern is upward trending. There is a long upward trend interrupted by a downward breakout, which then starts going upward again to climb even higher;
- Bear flag chart. As opposed to the bullish pattern, the bearish one goes down steadily. It is interrupted by a short upward spike only to continue going down afterwards.
You can determine a flag pattern by looking at its longer trend and the spike or short downtrend. With a bull flag pattern, the volume is decreased during consolidation. The bear flag trend has an upward consolidation, but the volume decreases as well.
What makes these flag patterns noticeable is their recurring nature. You can observe either a steady growth of the bullish flag pattern with a short downtrend or a continuous decline of the bearish flag pattern with short spikes.
The ability to interpret these trends is vital as it allows traders to build an effective trading strategy and make the best deals.
