How to Trade a Flag Pattern
Entry: Even though flags suggest a continuation of the current trend, it is prudent to wait for the initial breakout to avoid a false signal. Traders typically expect to enter a flag on the day after the price has broken and closed above (long position) the upper parallel trend line. In a bearish pattern, the day after the price has closed below (short position) the lower parallel trend line.
Stop Loss: Traders typically expect to use the opposite side the flag pattern as a stop-loss point.
Profit Target: Conservative traders may want to use the difference, measured in price, between the flag pattern’s parallel trend lines to set a profit target.
Disclaimer: All charts are purely for educational and information purpose only. Invest or Trade at your own risk.
Entry: Even though flags suggest a continuation of the current trend, it is prudent to wait for the initial breakout to avoid a false signal. Traders typically expect to enter a flag on the day after the price has broken and closed above (long position) the upper parallel trend line. In a bearish pattern, the day after the price has closed below (short position) the lower parallel trend line.
Stop Loss: Traders typically expect to use the opposite side the flag pattern as a stop-loss point.
Profit Target: Conservative traders may want to use the difference, measured in price, between the flag pattern’s parallel trend lines to set a profit target.
Disclaimer: All charts are purely for educational and information purpose only. Invest or Trade at your own risk.
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