Flag And Pennant On Forex

Flag and Pennant are continuation chart patterns. As a part of technical analysis science, they are identified by a consolidation movement after a clear/strong price movement. The consolidation(or the range bound movement) can be horizontal/flat or it can be contrary to the previous trend. The pattern is completed when they followed with a breakout as a continuation of the previous trend. They often appear on foreign exchange charts on any time frame, if you meet them then there are profit opportunities that you can get.

Flag and pennant Chart Patterns

If you find them either in a down trend or in an up trend their meaning are the same. They are just a temporary pause before they continue their earlier trend. Their difference is the shape, pennants are more similar to the triangle or wedges.

Flag and Pennant On Forex Chart

Above is a down trend market example from 15 minutes EURO USD chart. If you see like this on your forex trading platform then you may prepare for open short trade, you can put your short trade after the breakout of course or you can put a short stop order below the line and put your stop-loss above the last high point of the flag or the pennant.

Even beginner currency traders can easily recognize these patterns. On the EURO USD chart above is an example in an up trend. You can buy after the breakout or you can put a buy stop order above the line and put your stop-loss below the last low point of the flag. But you should remember that the flag does not always have a contrary consolidation movement from the primary trend, they can be horizontal also. You can practice these patterns with your own forex trading system. Or maybe you can make them as your basic strategy for entry. Flag and pennant  are simple chart patterns, and as a part of technical analysis they are quite reliable.