Flags are slanted rectangles that slope against the prior price trend. It is essentially a brief consolidation pattern before the trend continues in the previous direction, a quick forming continuation pattern. If sloped down it is a Bullish flag and breakout should occur to the top, if sloped up it is a bearish flag and breakout should occur to the bottom. Entry occurs at the breakout, and the stop is at the last swing low if a bullish flag, and the last swing high if a bearish flag.
Volume will be high during the price movement that occurs before the flag, and it will be high on the breakout of price from the flag. The volume will be relatively low during the flag itself.
Measurement occurs via the “flagpole”. The flagpole is the price run move, up or down, that occurs before the flag. Measure the vertical distance that occurs between the last reversal pattern and the flag, and project that distance from the breakout point. Add if bullish. Subtract if bearish.
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International Economic Analysis:
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