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Bull Flag Pattern and Bear Flag Pattern; Complete training


Ascending and descending flag patterns are popular price patterns used in technical analysis and traders often use them to determine the continuation of the trend. in this Article We have examined how to make transactions using these patterns.

What is the pattern of ascending and descending flags?

Rising and falling flags are price patterns that are seen in different time frames in financial markets. In technical analysis, these patterns are considered as trend continuity patterns, because usually after the appearance of these patterns, the trend that previously dominated the market continues.

In this article, we will look at how to identify these patterns, use them for trades, and find inbound and outbound trading positions through jumps, commensurate price targets, breakdown levels, and trading volume verification.

The flag pattern is detected when a strong movement occurs in one direction (ascending or descending) followed by a slow reverse trend. The chart below shows an ascending flag.

What is the Bull Flag Pattern and the Bear Flag Pattern?

In this diagram, the strong upward motion formed is called the “flag bar” and the short downward trend that follows is called the “flag”.

Forming an ascending flag pattern

What is the Bull Flag Pattern and the Bear Flag Pattern?

An uptrend is formed when a strong uptrend is followed by a short downward consolidation immediately thereafter. Such a pattern indicates that the urge to buy in the upward movement of the price is greater than the downward movement, and indicates that the positive trend in the price of the digital currency or the stock in question will continue.

What is the Bull Flag Pattern and the Bear Flag Pattern?

Rising traders are waiting for the price to jump above the resistance of the stabilization area to enter the market with a long position or buy. The breakout point is where the process that preceded the formation of the flag resumes.

What is the Bull Flag Pattern and the Bear Flag Pattern?

To derive the target price from the price jump, they often measure the height of the previous trend (the height of the flagpole) and extend it to a proportional distance from the jump level.

What is the Bull Flag Pattern and the Bear Flag Pattern?

To manage risk, price movement below the flag support level is considered as a stop-loss point or failure level.

Forming a descending flag pattern

A descending flag is like an inverted ascending flag.

What is the Bull Flag Pattern and the Bear Flag Pattern?

A bearish flag is formed when there is a sharp downward movement and immediately afterwards a short upward price stabilization. Such a pattern indicates that the urge to sell in the downward movement of the price is greater than the upward movement, and indicates that the negative trend in the price of the digital currency or the stock in question will continue.

What is the Bull Flag Pattern and the Bear Flag Pattern?

Down traders are waiting for the price to fall below the support of the stabilization zone; Then they enter the market with a short or sell position. The breakout point indicates that the process that took place before the flag was formed is now continuing.

What is the Bull Flag Pattern and the Bear Flag Pattern?

To derive the target price from the price jump, they often measure the height of the previous trend (flag bar) and extend it to a proportional distance from the jump level.

What is the Bull Flag Pattern and the Bear Flag Pattern?

To manage risk, price movement above the resistance of the flag formation area is considered as the point of loss or failure level.

Trading with ascending and descending flag patterns and trading volume patterns

Most often, they use trading volume patterns along with flag patterns to validate the interpretation that comes from the formation of flag patterns and their hypothetical results.

Trading with descending flag pattern and confirming trading volume

When a bearish flag is formed, traders expect to see high or increasing trading volume in the flagship (pre-flag trend). When higher-than-usual trading volume is accompanied by a downtrend, it means that the desire to sell that digital currency or stock has increased.

The flag, which indicates a slow stabilization and reversal from the downtrend, should be accompanied by a low or declining trading volume during formation. This indicates that there is less willingness to buy when the price moves in the opposite direction.

Whenever the volume of trades increases as the price moves down and the volume of trades decreases as it moves upwards, it indicates that the overall momentum of the market is negative. This reinforces the hypothesis that the previous downtrend will continue.

What is the Bull Flag Pattern and the Bear Flag Pattern?

The chart above shows the high and increasing levels of trading volume in the downtrend, which indicates that the momentum is strong in favor of sellers. However, the low chart shows the low and declining levels of trading volume in the stabilization flag, indicating a lack of interest in the gradual upward movement of prices.

What is the Bull Flag Pattern and the Bear Flag Pattern?

Together, these two charts show the optimal trading volume patterns that traders are looking for to detect the formation of a bearish flag. Such a combination indicates a persistent weakness in price.

Trading with ascending flag pattern and confirming trading volume

When a bullish flag is formed, traders expect to see high or increasing trading volume in the flag bar (pre-flag trend). Accompanying the higher-than-usual trading volume with an uptrend (flagpole) indicates an increase in the desire to buy that digital currency or stock.

The flag, which indicates a slow stabilization and reversal of the uptrend, should be accompanied by a low or declining trading volume during formation. This shows that when the price moves in the opposite direction, there is less desire to buy.

When the trading volume goes up when the price goes up and the volume goes down when the price goes down, we can say that the overall momentum of that market is positive. This reinforces the hypothesis of a continuation of the previous uptrend.

What is the Bull Flag Pattern and the Bear Flag Pattern?

The chart above shows the high and increasing levels of trading volume in the uptrend, which indicates that the momentum is strong in favor of buyers. However, the chart below shows the low and declining levels of trading volume in the stabilization flag, which indicates a lack of interest in the gradual downward movement of prices.

What is the Bull Flag Pattern and the Bear Flag Pattern?

Together, these two charts show the optimal trading volume patterns that traders use to detect the formation of an uptrend. Such a combination indicates the continuation of price increases.

Mutations with high trading volume

The traders of the uptrend and downtrend patterns are hoping to see that the jump point is accompanied by a bar indicating a high trading volume. The high bar of the trading volume, if accompanied by a jump, indicates a strong force in the direction that takes the price out of the stabilization zone and resumes the previous trend. The high jump in trading volume indicates that the direction in which the price jump occurred is likely to continue.

What is the Bull Flag Pattern and the Bear Flag Pattern?

The chart above shows an upward jump in an uptrend pattern accompanied by a long bar of trading volume. The high volume of trades confirms the jump and shows that the upward movement is valid and will be stable. The same principles and interpretations apply to the downtrend; That is, the high volume of trades with a downward jump in the area of ​​stabilizing the downward flag indicates the validity and stability of the downward movement.

Summary points of ascending and descending flags

  • The flag in the technical analysis indicates the continuation of the previous trend.
  • The “flag bar” shows the pre-flag trend.
  • The “flag” indicates stabilization after a process.
  • The uptrend says that the previous uptrend will continue.
  • The downtrend says that the previous downtrend will continue.
  • The height of the flagpole up to the jump level will reach the target price.
  • Traders when moving with the bullish pattern, the price moves below the lower level of the support area as a loss or breakout level.
  • When trading with a bearish flag pattern, traders set the move above the upper resistance level as the breakout or breakout level.
  • Trading volume patterns are often used to confirm the downward and downward price patterns of the flag.
  • In an uptrend, an increase in trading volume in the flagship section and a decrease in volume in the flag section validate the hypothesis that “the previous uptrend will continue.”
  • In a bearish flag, an increase in trading volume in the flagship section and a decrease in the volume in the flag section validate the hypothesis that “the previous downtrend will continue.”
  • The symmetry of the long bar of trading volume with the jump bar in the flag increases the probability of the pattern being successful.

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