Online Trading Techniques


he Flag pattern usually occurs after a significant up or down market move. After a strong move, prices usually need to rest. This resting period usually occurs in the shape of a rectangle, thus the word “flag”. The Flag is considered a continuation pattern because after resting, prices will usually continue in the direction they did before.

The chart of eBay (EBAY) shows many Flag patterns:


flag continuation chart pattern



Flag Buy Signal

When price has moved higher and prices have consolidated, creating a channel of support and resistance, a buy signal is given when prices penetrate and close above the upward resistance line.

Flag Sell Signal

Assuming prices previously moved downward, then after a period of price consolidation, a sell signal is given when the price penetrates and closes below the support line.

For more information on the concept of support and resistance. Another similar pattern discussed is Triangles

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