5. Flag chart pattern

A flag pattern is created when a market’s support and resistance lines run parallel to each other, either sloping upwards or downwards. It culminates in a breakout in the opposite direction to the trendlines.

  • In a bullish flag, both lines point downwards and a breakout through resistance signals a new uptrend

  • In a bearish flag, both lines point upwards and a breakout through support signals a new downtrend

Although they can be considered as reversal patterns – after all, the price action within the flag reverses when the breakout occurs – flags are usually classed as continuation signals because they tend to occur after uptrends (bullish flags) and downtrends (bearish flags).

Think of it in three parts: a strong directional move, followed by a slow counter trend – the ‘flag’ – and a breakout.#BinanceTurns7