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A flag/pennant pattern is a trend continuation pattern, named after it’s visual similarity to a flag on a flagpole and pennant on a pole. It signifies a continuation of the break out or break down. Flags and pennants provide great opportunities of entry to buy or sell a pull back or relief rally.

Bullish Flags and Pennants

A bull flag or pennant is identified by an impulse move to the upside, followed by the flag or pennant formation(an excellent pull back entry). Afterwards, price will continue to the upside. For extra risk management, enter long when the price breaks above the top of the flag/pennant.

Theory

Practice

Bearish Flags and Pennants

A bear flag or pennant is identified by an impulse move to the downside, followed by the flag or pennant formation(an excellent short entry). Afterwards, price will continue to the downside. For extra risk management when shorting, enter when the price breaks below the bottom of the flag/pennant. 

Practice

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