Flag and pennant are the most common and the most reliable formations. Flag or pennat are occured after a hard rising or decreasing. It shows that prices are consolidated before moving on same trend.
Generally, direction of prices is occured in opposite direction of main trend. It shows hesitation about continuation of main trend. As a result, this period is a hesitation period, and then main trend continues. Although flag and pennant formations show continuation of main trend, there is no observable different between these formations. Flag passes rectangle consolidation process. support point and resistance point in equal distance. Pennant consisted of support point and resistance point which move toward each other (like a asymmetric triangle ). Both flag and pennat are seen end of a hard trend.
Pennats are formations ,which is occured by tightening price movements. It looks like triangles. It can be said that pennats are formations which accept continuation of trend. Flag formation can be interpreted like pennat formation. It is consisted of parallel line of support and resistance, as visual. It occurs after price movements just like pennant formation. Flags and pennants can be interpreted as shorter term than triangles. An another difference of flags and pennats is extension which is called pole. Pole consists of right and hard upward movement or upwar movement before formation. Generally, it is expected that price move up or down up to size of direct with complete of formation. Trading size is a important indicator in flag and pennat formation like all formations. The biggest mistake is interpretation of formations as fortune telling. And expectation that rules ,which are told in here, definitely will happen. You need to be careful about this situation while working in formations. As a conclusion, bricks ,which are on the price graph, can be seen more easily when experience increases. Informastions about these formations are supposed as facility if formations are noticed when investment strategies are established.
- Date: 17 November 2016 Thu 12:50
- Last Added
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