When entering the cryptocurrency market, identifying reliable entry signals is crucial. The flag pattern is a widely used chart tool among top traders worldwide, helping you precisely seize trading opportunities during trend continuation. Whether it's a bullish flag or a bearish flag, these trading flags provide clear reference points for risk management.
This guide will give you an in-depth understanding of the essence of the flag pattern and teach you how to apply this powerful tool in actual trading.
Structure and Principles of the Flag Pattern
The flag pattern consists of two parallel trendlines and is a typical continuation pattern, specifically used to predict the direction of price movement after a breakout. Within the flag zone, the high and low points form a channel resembling a parallelogram. This appearance is reminiscent of a flag fluttering in the wind, hence the name.
Usually, the price consolidates sideways before breaking out. But when this channel is broken