Flag is a continuous pattern. The flag itself is a pullback from a bullish/bearish market. It’s a robust pattern that works with every asset class and across timeframes.
We have two variations of the flag. A normal and a horizontal flag.
A normal flag as shown above is a pullback/pause after the market had been rallying. Consisting of support and resistance levels of lower highs and lower lows. We then wait for a breakthrough the resistance line. We enter on the break, placing the stop loss below the low of the flag structure. We use the height of the flag pole and project it upwards from the base of the flag. This pattern normally gives a 2:1 Risk: Reward ratio.
We have a horizontal flag variation of the flag.
It’s quite similar to the normal flag except that it’s support and resistance lines of the flag are horizontal instead of slanted.
The bearish variation works the exact same way except for the direction.
Normal bearish flag
Bearish horizontal flag