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Flag Pattern
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In a flag formation, the resistance and support lines are nearly parallel and horizontal.  The expectation is that the price will break out of the channel in the same direction as it entered the channel.
 
The bullish flag pattern has a sharp increase followed by the horizontal or nearly horizontal lines.  The bearish flag pattern has a sharp decline followed by the flag.  The sharp increase or decrease acts as the 'flagpole' of the flag.
 
The trading volume is a strong confirmation that this is a genuine move.  Look for declining market volume followed by a sharp increase as the price breaks out of the channel in both a bear or bullish flag.  When this occurs buy or sell as appropriate.
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