Forex bull flag
Trend-Line Support as New Resistance. Bull Flag Break Opens Door for Continuation.
There are many different patterns that traders follow to help time entries and exits. The flag pattern is one that tends to catch my interest when I find it because they can provide explosive moves. The AUDCAD appears to be in the middle of a potential bull flag pattern.
Today, we will look at how to identify higher probability trading opportunities off the bull flag pattern. First identify an instrument in a strong up trend flag pole. Through the duration of this uptrend, eventually prices need to rest and consolidate those gains. The flag portion of the pattern tends to be a gently downward sloping price channel.
Flag, Pennant (Continuation) [ChartSchool]
Additionally, this consolidation will retrace a small portion of the previous up trend. Since this is a continuation pattern, we look for prices to break higher with a length equal to the size of the flag pole. For the past 3 months, traders have been buying risk through commodities, the stock market , and risk based currencies.
As a result, the Australian Dollar has performed well against most other currencies because it offers a higher interest rate of return. So we have a fundamental back drop for additional strength in the Australian Dollar. Today, we will match the AUD against the Canadian Dollar. Back in October , we saw this pair form and complete a flag pattern as the Australian Dollar pushed higher in conjunction with the stock market bouncing higher. Here is a picture of the completed pattern.
The previous uptrend flag pole is noted in green. Prices consolidated in a gently down ward sloping price channel.
Frank Denneman
To trade the flag, you can time an entry at the lower end of the price channel or wait for a break up above the upper channel.
Look to take profits by projecting the length of the flag pole at the bottom of the flag orange dotted line. Prices are currently consolidating sideways in a gently down ward sloping price channel. Therefore, we have an opportunity to enter into a trade with at least a 1: Look for an entry near the bottom of the black price channel as support to go long.
Place a stop loss just below the swing low. So that means an entry near 1. Once prices reach the top of the black channel, look to move the stop loss to break even.
How to Trade a Bearish Flag Pattern 25 of Analyzing a Double Top. To contact Jeremy, email jwagner dailyfx. Follow me on Twitter at JWagnerFXTrader. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Market News Headlines getFormatDate 'Wed Jun 21 Technical Analysis Headlines getFormatDate 'Wed Jun 21 Trend-Line Support as New Resistance getFormatDate 'Wed Jun 21 Education Beginner Intermediate Advanced Expert Free Trading Guides. Click here to dismiss. Get Your Free Trading Guides With your broad range of free expert guides, you'll explore: News getFormatDate 'Wed Jun 21 News getFormatDate 'Tue Jun 20 How to Trade Bullish Flag Patterns getFormatDate 'Tue Feb 21 Swing trading, chart patterns, breakouts, and Elliott wave Connect via: The flag pattern is fairly simple with just three components.
FOREX: How to Trade Bullish Flag Patterns
The flag pole The flag A strong up trend First identify an instrument in a strong up trend flag pole. Fear of the Unknown getFormatDate 'Tue Feb 07 Upcoming Events Economic Event.
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