Blog
What are Bullish and Bearish Flags?
Bullish flags are basically formations which occur when the slope of the channel which connects the highs and lows of consolidating prices when there is a considerable move upwards looks to be declining and parallel. The trend before this flag will be up.
Bearish flags on the other hand are when the move is parallel and rising, with the trend before the flag being down.
Bullish and bearish flags are important and they clearly demonstrate that the market does not decide whether to break up or down. At the point that the flag is broken by the price, then there will be a considerable move in the direction of that break.
As a trader you can use flags so as to be in a better position to interpret significant breaks in the price. In cases when the price breaks through the flag to the downside, there could be a substantial move downwards. And, in case the price breaks through the flag to the upside then chances are that there will be a considerable move up.
Bearish flags on the other hand are when the move is parallel and rising, with the trend before the flag being down.
Bullish and bearish flags are important and they clearly demonstrate that the market does not decide whether to break up or down. At the point that the flag is broken by the price, then there will be a considerable move in the direction of that break.
As a trader you can use flags so as to be in a better position to interpret significant breaks in the price. In cases when the price breaks through the flag to the downside, there could be a substantial move downwards. And, in case the price breaks through the flag to the upside then chances are that there will be a considerable move up.