Flags and Symmetrical Triangles

Trend Chart Patterns: Flags and Symmetrical Triangles

• There are three main categories of trend chart patterns in trading, and continuation patterns are favored by traders as they identify the current market trend for better understanding of trading.
• The Flag, also known as the Drapeau, is a widely traded chart pattern in forex and stock markets that marks a pause in the current trend before continuing the previous uptrend or downtrend.
• The Flag consists of an important impulse movement followed by the formation of a channel, which takes the form of two parallel trend lines.
• To complete the Flag pattern, the price must touch the upper and lower bounds of the channel at least twice each.
• The theoretical objective of the Flag pattern corresponds to the size of the previous impulse movement, reported from the channel break.
• The Symmetrical Triangle is a common trading pattern in forex and stock markets that illustrates a contraction of the price within the current trend before continuing the previous uptrend or downtrend.
• The Symmetrical Triangle consists of an important impulse movement followed by the formation of a triangle in which the price narrows.
• To complete the Triangle pattern, the price must touch the descending and ascending trend lines at least twice each.
• The theoretical objective of the Triangle pattern corresponds to the distance between the first two tests, reported from the triangle break.
• The Triangle pattern is invalidated when the price closes outside the triangle in the opposite direction of the current trend.
• The Symmetrical Triangle can also be called the Flag pattern, and there are also Descending and Ascending Triangle patterns.
• The Descending Triangle pattern is initiated by a downtrend movement followed by the formation of lower highs and identical lows, while the Ascending Triangle pattern is initiated by an uptrend movement followed by the formation of identical highs and higher lows.