Entrance is a deal only on a breakout confirmed by the of the "canvas" of the figure.
"Bear Flag". The flag is considered a strong figure, therefore, a turning point in the trend on this figure is very rare.
More often than not, the “Flag” appears in the middle of the trend movement, therefore, usually after the break of a pattern, the price travels a distance equal to the price move before the pattern forms. The value of the distance the price moves after breaking the figure is usually equal to the size of the flagpole (the distance traveled by the price before the formation of the figure).
It is believed that the flagpole should be steep on the decline, and its length should be two times the width of the base of the flag ("canvas").
Interestingly, this pattern can occur several times within the same time scale. Its appearance means that the trend will continue in the same direction as it was. This very often happens on a downtrend when there is a "drain" with a temporary hold on the price. The "flag" is formed faster precisely in the "bear market".
Features of the formation of the "Flag".
1) The appearance of the figure is preceded by a sharp price movement in the form of an almost straight line, and accompanied by a large of trade.
2) The flagpole of the flag must rise sharply, and its length should be approximately two widths of the base of the flag canvas.
2) In the process of shaping the figure, indicators gradually decrease.
3) Very often, the “Flag” is formed near the middle of the price movement. As a result of this, after a breakthrough, the price must go the same distance as before the formation of this figure.
4) The flag is formed both in an uptrend and in a downtrend.
5) “Flag” are formed faster in a bear market.
6) The “flag” is very similar to a small parallelogram, located with an inclination in the direction opposite to the trend movement.
7) “Flag” - a fairly strong and stable figure, for which a trend fracture is unusual. (on completely manipulative instruments with low capitalization, a trend fracture occurs, for obvious reasons).
A is formed on a . Therefore, the name is appropriate. After a sharp downward movement on increased volumes, a small rollback follows (Formation of the "canvas" of the flag), after which the trend continues. So during the formation of the "canvas" of the figure, we need to find this formation and identify it. Perhaps the price is now in the formation of the "canvas" of the flag.
Pay attention when the price has broken the triangle down - huge volumes have come out on the impulse. Perhaps this impulse is our “Flagstaff”.
The key to trading flags is tracking. When volumes rise during a breakout, it is usually necessary to enter a short position.
Trading and the formation of the "Flag".
The formation of the “Flag” and indicators are closely interconnected.
This usually happens like this:
1) The formation of a flagpole in a fast market is accompanied by an increase in indicators. A buy panic or a sell panic pushes the price up / down the bistro.
2) During the further formation of the figure, the indicators gradually fall. There is a process of correction (price consolidation within trends), and none of the market participants will ever go against the main trend. For this reason, the “Flag” usually tilts in the opposite direction to the main trend. But this usually does not last long.
3) At the time of breaking the figure, the indicators increase sharply, which indicates the continuation of the previous trend. There is an impulse, the trend continues.
If, during the formation of a figure, the indicators increase in the direction of the trend and fall when moving against the trend, then this is a good signal that the price will break the figure in the direction of the main trend.
If support is now breaking through and the price is fixing below it, then all this 3-week flat acts as a canvas of the descending flag, the first goal is 11%. A trading idea is published 2.5 weeks ago, the descending flag is realized.
If, nevertheless, we hold this level and continue to continue lateral movement, then the movement inside the canvas that is very possible to start is + 11%
Then you need to look at the situation, if we break through the resistance of this 3-week flat and the price fixes above it, then it is more likely to make + 11% (together + 22%) into the zone of strong resistance (former support for the triangle).
I also ask you to pay attention to the downtrend of the same triangle, it can also hinder the price, and if it is overcome, it can be a good launching pad for growth. How will this mean that the downtrend angle dictated by the past triangle formation is broken.
The algorithm is shown in the description of the trading idea.