Gold Spot- Bulling Flag Pattern

OANDA:XAUUSD   Gold Spot / U.S. Dollar
What is a Bullish Flag Pattern?
The bullish Flag pattern is usually found in assets with a strong uptrend. It is called a flag pattern because it resembles a flag and pole. Pole is the preceding uptrend where the flag represents the consolidation of the uptrend.

How does Bullish Flag Pattern?
The flag pattern resembles a parallelogram or rectangle marked by two parallel trendlines that tend to slope against the preceding trend.

Phase 1: Preceding Uptrend
When there is an extreme demand in prices there is an uptrend. It continued as the demand increases.

Phase 2: Flag
After the sharp uptrend when supply increases more then the demand prices move to the consolidation phase or flag phase. This acts as a small price channel .

Phase 3: Uptrend Continuation
As the flag is a pause in an uptrend, as prices consolidate investors again start to show interest in the asset which eventually leads to heavy demand again which further leads to a breakout and uptrend continuation.

Role of Volume:
Volume plays a vital role in the completion of the Bullish Flag pattern. When in a preceding uptrend the volume is quite higher. In the flag phase, the volume starts to go down as investors are least interested to buy and sell that particular asset. And again on the breakout, the volume surges. Volume with Breakout gives a good indication of a successful uptrend.


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