Flag Pattern
A flag pattern is a technical analysis charting pattern that is used to predict the direction of a security’s price. It is formed when there is a sharp price movement followed by a period of consolidation. The flag pattern is considered a continuation pattern, meaning that it is used to predict that the price of the security will continue in the same direction as the initial price movement. The flag pattern is made up of two parts: the flag pole and the flag.
History of the Flag Pattern
The flag pattern was first described by Charles Dow, one of the founders of Dow Theory. Dow Theory is a form of technical analysis that is used to predict the direction of a security’s price. The flag pattern is one of the most commonly used charting patterns in technical analysis. It is used by traders to identify potential entry and exit points in the market.
Flag Pattern Table of Comparisons
| Pattern | Description |
|---|---|
| Flag | Sharp price movement followed by a period of consolidation |
| Pennant | Sharp price movement followed by a period of consolidation with a triangle shape |
| Wedge | Sharp price movement followed by a period of consolidation with a wedge shape |
Summary
The flag pattern is a technical analysis charting pattern that is used to predict the direction of a security’s price. It is formed when there is a sharp price movement followed by a period of consolidation. The flag pattern is considered a continuation pattern, meaning that it is used to predict that the price of the security will continue in the same direction as the initial price movement. For more information about the flag pattern, traders can visit websites such as Investopedia, TradingView, and StockCharts.
See Also
- Dow Theory
- Technical Analysis
- Price Movement
- Continuation Pattern
- Pennant Pattern
- Wedge Pattern
- Charting Pattern
- Support and Resistance
- Trend Lines
- Candlestick Patterns
