Flags and Retinal artery pennants are Erythromycin 250 mg essentially the Buy Antivert Online same thing, but are Advair Diskus 500 mcg shaped in a slightly different manner. Both involve a surge in one direction or another, followed by consolidation. It can be said that they tend to be continuation of a trend, and therefore attract a lot of attention by traders. The consolidation is quite often a symptom of the market taking a break after a larger run, much like other consolidation patterns. After all, the markets simply cannot run in one direction forever – otherwise we would all be rich!

The patterns share several of the same characteristics, and can be used in the same manner in a lot of situations. With that being said, let me explain their structure a little bit before I present the video in order to explain how they can be used.

Flags

Flags look like….well, flags. The pattern Sildenafil citrate involves a "pole" and "flag". It is Buy Bupropion Online comprised of Xenical 60 mg a large Trandate 100mg - 30 pills move in one direction that is fairly straight up or straight down. (The pattern has both a bullish and bearish version.) The move needs to be fairly strong in order for it to look like a "pole". Attached to this "pole" is the "flag". The flag is simply a consolidation pattern that signals a markets taking a breather. But like many consolidations – it is only temporary. At least that is the hope of traders using this pattern. The market taking a rest is natural, but something happened in order to make that pole in the first place. There was a definite market bias. If all things remain equal – that bias should continue. If the market had been running upwards, it is considered a "bullish flag", if the market was falling, it is a "bearish flag".

Looking at Allied powers Trileptal 150mg - 30 pills in ww1 the example Atarax 25mg - 90 pills to the left, you can Nexium 20mg - 180 pills see the construction of a bullish flag. Notice how the market was running straight up for a while as positive sentiment was abundant. The market eventually calmed down a bit, and a flag was formed by a gradual and calm consolidation. Notice how it actually pulled back slightly during this time period. It can do this, or even go sideways. In some sense, the flag is simply a surge in one direction – followed by a rectangle. (Perhaps with a small slant to it.) But it means the same thing, consolidation after a large move. Both hint that things could continue.

A few quick rules:

• The flag shouldn’t be any longer than 1/3 of the pole. Granted, it can be a little bit longer, or even shorter – but use common sense, if the flag keeps going on and on, it more often means indecision rather than a rest.
• The pole can be used as a measuring stick. The length of the pole from one end to another is the projected move once the flag gets broken out of, continuing the original trend that formed the pole and flag to begin with.
• A flag that breaks against the pole’s direction is considered a busted pattern, and doesn’t mean much beyond market confusion.
• A trade shouldn’t be taken until we break beyond the consolidation area. (flag) Until then, it is simply speculation that we will get a move. Remember to react – not anticipate.

We know from previous lessons that the pattern doesn’t signal a trade until we break out of it. In this sense, all consolidation patterns are the same. Unlike the simple rectangle however, this pattern has a measuring stick – the pole. If the pole is 400 pips, that is your target on the break out of the flag.

Note that flags are similar to other patterns in so much as they are more important on the higher time frames than on the lower ones. For example, a flag on a 5 minute chart can mean something, but not nearly as much as a flag on a weekly chart. This is because the surge upward (in the case of the previous chart.) is more impressive over the span of several weeks, rather than 45 minutes or so.

There are bearish flags as well, and they are traded the same way. They simply have a sharp move lower, and then form a rectangle on the pole, just like the chart above. They are simply the opposite of the bullish flag. Remember, in order to form one of these things you need momentum. That momentum used to form the pole should leave no doubt as to what direction the market is going in over the longer-term. Because of this – I prefer flags on daily or even weekly charts. A lot of profits come to those that are willing to wait, and be patient on the move. I cannot tell you how many bad trades I used to make "anticipating" a move. Never – and I mean never do that!

Pennants

If flags Tylenol or ibuprofen can be Myambutol 600mg - 90 pills thought of Minocin 50 mg as rectangles Allegra 30mg - 90 pills on a stick – pennants are simply triangles on a stick! This is what I love about technical analysis: If you understand how to trade a triangle, you are already half way to understanding this pattern. The initial move is a surge in one direction. This gives us the "pole", and shows the market’s bias in general. Although the pennant is traded in a very similar manner as a flag, the one thing that makes it different than the flag, or the triangle pattern for that matter – is that the consolidation within the triangle (or the pennant) area can run all the way to the end of it. In other words, unlike the triangle, it doesn’t need to break out before the point of the shape. In fact, that is what makes is a pennant in the first place!

By looking Will trazodone Diclofenac 100 mg get you high at the Buy Renagel Online bearish pennant Seroquel 300mg - 90 pills on the right, you can see that the pole is essentially the same as a flag. However, the shape on the end is a simple triangle. But as I said before, the triangle doesn’t need to be broken out of before the point. If it is, well…..then you just broke out of a triangle, and not a pennant! If that is the case, you won’t necessarily want to measure the pole for a target, rather the height of the triangle. A pennant needs to come to a point.

Much like the flag, it needs to be a continuation of the original move, otherwise it is simply a choppy market. This is why we want to see a break out of the pennant before getting involved! (I cannot stress this point enough…..I have seen so many people get involved too early, and then ask "Why doesn’t this stuff work out for me?") Make sure you are clearly getting a signal before getting involved with a pattern.

By learning about these patterns, I hope you are starting to see that technical analysis is simply a way of spotting consolidation and trends. If I had to break it down to it’s essence, that is how I would say it. While it will take time for you to spot these patterns and technical bits rapidly, it can greatly increase your odds at success in the trading world.

One more thing about pennants: They can come in other shapes as well. Remember those descending and ascending triangles? Those shapes can be parts of a pennant as well, as they essentially mean the same thing. Remember, it isn’t the exact shape that matters, rather what it is saying that truly counts. I cannot stress that point enough, and cannot impress upon you how much you should think about that statement. While I love these patterns, technical analysis is an art form, and at times will ask you to use a little artistic license when reading the charts. The truth is that you are trying to understand how the market "feels" about risk. That’s it! Are they liking the Euro recently? Or are they more interesting in buying the USD as a safe haven play? These types of answers can always be found in the charts, if you are willing to listen to what they have to say. As we go along on our journey together, I hope I am able to get you to think a little more about the meaning behind technical patterns, and not just that a certain shape happens, and you should do a certain action. It’s not that at all. It’s about understanding what the market as a whole is thinking!

 

 

 

In order to make sure you understand the concept of flags and pennants, please watch this video: (I suggest that you click the full screen button in the lower right hand corner as the video is recorded in HD.)