BEARISH FLAG PRICE ACTION
This chart pattern starts forming with bears already in control of the exchange rate's sharp downtrend. When bulls enter the market, trading is contained briefly in an up-sloped range. Bears then break that range's lower resistance, and the exchange rate continues its downtrend.
Let's break down the pattern formation!
A sharp downwards price action is initiated from (1) till it finds the first resistance (2), creating the flag's pole.
Price action reverses direction from the first resistance (2) and starts forming higher lows and higher highs in a narrow flag-like formation, till it finds the highest support in that formation at point (3)
The pattern is completed when price action reverses direction from the highest support (3) and goes downwards till it breaks the flag's lower border at point (4)
Entry: after breaking the flag's lower border at point (4)
Take profit: identified by measuring the flag's pole height, which is the vertical distance between points (1) and (2), that measurement is then applied from the breakout rate (4)
Stop loss: the flag's highest high (3)
This chart pattern starts forming with bears already in control of the exchange rate's sharp downtrend. When bulls enter the market, trading is contained briefly in an up-sloped range. Bears then break that range's lower resistance, and the exchange rate continues its downtrend.
Let's break down the pattern formation!
A sharp downwards price action is initiated from (1) till it finds the first resistance (2), creating the flag's pole.
Price action reverses direction from the first resistance (2) and starts forming higher lows and higher highs in a narrow flag-like formation, till it finds the highest support in that formation at point (3)
The pattern is completed when price action reverses direction from the highest support (3) and goes downwards till it breaks the flag's lower border at point (4)
Entry: after breaking the flag's lower border at point (4)
Take profit: identified by measuring the flag's pole height, which is the vertical distance between points (1) and (2), that measurement is then applied from the breakout rate (4)
Stop loss: the flag's highest high (3)