Trading a Flag, Ethereum
ETH made a bearish flag, broke below the flag, went down almost equal to the flag width, and is on its way to pull back.
What Is a Flag?
In the context of technical analysis, a flag is a price pattern that, in a shorter time frame, moves counter to the prevailing price trend observed in a longer time frame on a price chart. It is named because of the way it reminds the viewer of a flag on a flagpole.
How to Trade a Flag Pattern
Using the dynamics of the flag pattern, a trader can establish a strategy for trading such patterns by merely identifying three key points: entry, stop loss and profit target.
Entry:
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.
A more optimistic approach would be to measure the distance in dollar terms between the pattern’s high and the base of the flagpole to set a profit target.
Moshklegosha
Reference Article:
https://www.investopedia.com/terms/f/flag.asp
What Is a Flag?
In the context of technical analysis, a flag is a price pattern that, in a shorter time frame, moves counter to the prevailing price trend observed in a longer time frame on a price chart. It is named because of the way it reminds the viewer of a flag on a flagpole.
How to Trade a Flag Pattern
Using the dynamics of the flag pattern, a trader can establish a strategy for trading such patterns by merely identifying three key points: entry, stop loss and profit target.
Entry:
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.
A more optimistic approach would be to measure the distance in dollar terms between the pattern’s high and the base of the flagpole to set a profit target.
Moshklegosha
Reference Article:
https://www.investopedia.com/terms/f/flag.asp
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