What is a Bullish Flag Pattern? The bullish Flag pattern is usually found in assets with a strong uptrend. It is called a flag pattern because it resembles a flag and pole. Pole is the preceding uptrend where the flag represents the consolidation of the uptrend.
How does Bullish Flag Pattern? The flag pattern resembles a parallelogram or rectangle marked by two parallel trendlines that tend to slope against the preceding trend.
Phase 1: Preceding Uptrend When there is an extreme demand in prices there is an uptrend. It continued as the demand increases.
Phase 2: Flag After the sharp uptrend when supply increases more then the demand prices move to the consolidation phase or flag phase. This acts as a small price channel .
Phase 3: Uptrend Continuation As the flag is a pause in an uptrend, as prices consolidate investors again start to show interest in the asset which eventually leads to heavy demand again which further leads to a breakout and uptrend continuation.
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