Risk Disclaimer

Risk Disclaimer: Trading is risky! Never trade money you can not afford to lose! Site content is only personal opinion and never a Trade Recommendation! Futhermore the blog content needs to get reviewed to analyse whether it is up-to-date and still appropriate in the authors view.

Flag patterns

Bull and Bear Flags


Trading the Flag patterns



eur/usd techncial chart analysis
Daily Euro US Dollar Forex Market Update
At the daily chart we had a small consolidation last week (circled) at the 1.2931 support level created by the daily low from January 25 and the gap from January 23.

eur/usd techncial chart analysis
4 hour Euro US Dollar Forex Market Updates
Oh the 4 hour chart we see that the daily support and the 61.80 % fib extension from the A-B wave moved to the C wave at 1.2928 held the market last week (no confirmed break of the the support). However, price also could not bounce back so that the bear flag got triggered due to this weeks gap down. In the following, price held at the 61.80 % fib extension from wave C-D moved to point E at 1.2884 in the Asian session today.

Bear flag trading pattern
1 hour Bear flag trading pattern


As seen on the 1 hour chart, the 100 % fib extension of wave a-b moved to point c at about 1.2882 strengthened this support area. Market consolidated there but could not bounce back so that  the following bear flag was created, and price broke down in the European session to the 1.2825 support level created by Weekly S1, Monthly S2 + the 100 % fib extension at point a (or point E on 4 hour chart) at 1.2825 and the most recent fib extension of wave c-d moved to point e at 1.2819. Market seems now to consolidate at this support level.


Note:

Bear/Bull flags show that the market is unable to bounce back from the support/ resistance level and erode these levels over time till the market stops consolidating and continues the trend (level can not be held any more after accumulation/ distribution is over).

In a strong trend the bull/ bear flags can repeat over and over till a rejection of the breakout occurs (price moves back into the consolidation) or the the bull/ bear flag fails (breakout of the consolidation is to the other side. Then, a turn around or larger consolidation could follow


No comments:

Post a Comment

Back to top