Flags Signals In Forex Chart Analysis

Flags Signals In Forex Chart Analysisforex chart 18,100 18,100 CA$5.14, 5/424=1.2%forex chart analysis 320 320 CA$4.95, 5/424=1.2%flag pattern 5,400 5,400 CA$0.51, 8/424=1.9%currency pair 3,600 3,600 CA$7.16, 5/424=1.2%Word Count: 424
Tracking the rise of your currency pair using chart analysis sometimes give us several periods and several consecutive upticks. But for the past few periods, the price looks to be trending sideways. Up and down-range bound. If this is something youve experienced, then hopefully you were able to hang in there for a while until you were able to confirm either a trend continuation or reversal.Chances are that the currency pair was setting up a flag pattern. Usually, in forex chart analysis, a flag pattern marks a consolidation period that will result in the continuation of the original trend. As the price of a currency pair trends-either upward or downward-at some point there will a brief period of consolidation, and even retracement. The trend basically appears to have lost its original momentum. And the price of the currency pair becomes range bound-moving up and down between resistance and support.When the resistance trendline and the support trendline are parallel, then this is a flag pattern. In its idealized form, the price bar zigzags between support and resistance levels that are always at about the same level. Some traders also refer to this pattern as a parallelogram pattern.In reality, this pattern coming out of an uptrend could actually result in lower lows and lower highs each time it touches a support or resistance trendline. This is why some traders who use forex chart analysis will refer to this as a retracement pattern. In the case of a downtrend, the flag pattern will temporarily retrace to higher highs and higher lows.Many traders who use forex chart analysis believe that once there is a breakout, the trend will continue by at least as much as the trend leading into the flag pattern. This is why these traders call this pattern a half mast pattern-the flag appears halfway up the mast that is formed by the prevailing trend of the currency pair.Other, more conservative traders, believe that the breakout from a flag pattern will result in a continuation of the trend by at least as much as the gap between the high and low of the trading range while in the flag pattern.When you encounter a flag pattern in your forex chart analysis, you need to remember one important fact. Even though it is usually identified as a continuation pattern, it is also possible for it to be the beginning of a trend reversal. So you should always incorporate some form of confirmation and contingency in your analysis.