Bullish Flag and Pole Chart Pattern Explained
- The consolidation area indicates the sellers are trying to push the price down, but they are failed.
- The flag and pole pattern basically formed after an important resistance level breakout.
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- Flag & Pole and Inverted Flag & Pole are both trend continuation chart patterns.
- In which Flag and Pole is a bullish trend continuation chart pattern.
- And Inverted Flag and Pole is a bearish trend continuation chart pattern.
- In this article, we will discuss about the Flag and Pole chart pattern:
FLAG AND POLE CHART PATTERN
- A Flag and Pole is a bullish trend continuation chart pattern that formed after a sharp price movement to the upside.
- After the sharp upside movement, the price is enter in a consolidation phase.
- A sharp upward movement of the price is called the 'Pole'.
- And a consolidation phase is called the 'Flag'.
- The previous trend of the market was up, and after the pattern breakout the trend is continuing on the up side.
- Therefore, this pattern is called the bullish continuation flag and pole pattern.
• When do the Flag and Pole pattern work well ?
- The Flag and Pole pattern work well, when the previous trend of the market is an uptrend.
- As well, this pattern would work well if it formed after a breakout of an important resistance level.
- When the retracement of the flag (consolidation phase) is above 50% of the pole (sharp movement of the price), this pattern works well.
• When should the flag and pole pattern be avoided ?
- Avoid a bullish flag and pole pattern if it formed in a bearish (downtrend) market.
- Because of selling pressure in a downtrend, there is a high probability that the pattern will fail.
- Avoid this pattern if the retracement of the flag (consolidation phase) is more than 50% of the pole (sharp movement of the price).
• Entry :
- Take entry when the candle is close above the flag.
• Stop Loss :
- SL should be placed below either the previous swing or below the breakout candle.
• Target :
- The target should be the parallel distance of the pole.
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