TIME STAMPS:
00:00:00 WHAT IS FLAG PATTERN?
00:00:26 FLAG PATTERN TYPES
00:01:42 BULL FLAG PATTERN
00:04:28 BEAR FLAG PATTERN
00:05:27 BULL PENNANT PATTERN
00:06:44 BEARISH PENNANT PATTERN
00:07:44 WEDGE PATTERN
00:08:20 TYPES OF WEDGE PATTERN
00:09:00 RISING WEDGE
00:11:00 FALLING WEDGE
Flag, Pennant, and Wedge Chart Patterns Explained
1. Flag Pattern:
Appearance: Resembles a rectangular flag on a flagpole.
Formation: Starts with a sharp price movement (flagpole), followed by a consolidation phase (flag).
Bullish Flag: Forms after a sharp upward move, with consolidation slightly sloping downward.
Bearish Flag: Forms after a sharp downward move, with consolidation sloping upward.
Breakout: Usually resumes the previous trend direction after consolidation (up for bullish, down for bearish).
Tip: Look for volume contraction during the flag and a volume spike on breakout.
2. Pennant Pattern:
Appearance: Similar to the flag but with converging trendlines, forming a small symmetrical triangle (pennant).
Formation: Like the flag, a pennant begins with a strong move (the pole), but instead of a parallel consolidation, price action converges into a tight range.
Bullish Pennant: Appears in uptrends, with a breakout to the upside.
Bearish Pennant: Appears in downtrends, with a breakout to the downside.
Key Feature: Unlike the flag, the consolidation here is triangular, as buyers and sellers compress price.
Breakout: Typically happens with volume confirmation.
3. Wedge Pattern:
Appearance: The wedge pattern is formed by two converging trendlines, but unlike the pennant, the wedge usually slants either up or down.
Types:
Rising Wedge (bearish): Formed in an uptrend or downtrend with the price narrowing upwards. The breakout is usually downward.
Falling Wedge (bullish): Formed in a downtrend or uptrend, with prices narrowing downward. The breakout is typically upward.
Key Feature: Wedges take more time to develop than flags or pennants and often signal a trend reversal or continuation, depending on the context.
How to Trade These Patterns:
Entry Point: Traders often enter on the breakout from the consolidation (flag/pennant) or after price escapes the wedge pattern.
Stop Loss: Placed below (for bullish patterns) or above (for bearish patterns) the breakout point or near the opposite side of the wedge.
Take Profit: Measured by projecting the height of the flagpole or wedge pattern from the breakout point.
Visual Cues:
Flag: Quick, rectangular consolidation after a strong move.
Pennant: Triangular consolidation following a sharp move.
Wedge: Slanting, tightening range signaling a possible trend reversal.
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