Afternoon The flag is flowing - here is a brief explanation...

Afternoon

The flag is flowing - here is a brief explanation

regards





Bullish Flag Formation Signaling a Move Higher




What Is a Bullish Flag?

Bullish flag formations are found in stocks with strong uptrends and are considered good continuation patterns. They are called bull flags because the pattern resembles a flag on a pole. The pole is the result of a vertical rise in a stock and the flag results from a period of consolidation. The flag can be a horizontal rectangle but is also often angled down away from the prevailing trend. Another variant is called a bullish pennant, in which the consolidation takes the form of a symmetrical triangle.

The shape of the flag is not as important as the underlying psychology behind the pattern. Basically, despite a strong vertical rally, the stock refuses to drop appreciably, as bulls snap up any shares they can get. The breakout from a flag often results in a powerful move higher, measuring the length of the prior flag pole. It is important to note that these patterns work the same in reverse and are known as bear flags and pennants. Bull flags typically begin to surface in conjunction with a new market rally.

KEY TAKEAWAYS

• A flag pattern, in technical analysis, is a price chart characterized by a sharp countertrend (the flag) succeeding a short-lived trend (the flag pole).
• A bullish flag appears like an upright flag on a price chart, with a rectangular price pattern marking the flag itself.
• The tighter the flag, the better the signal is said to be.