In technical analysis, a flag is a chart pattern that appears as a small rectangle or parallelogram shape that slopes against the prevailing trend.
So named due to the shape of the formation resembling a flag on a pole. The pole being a move in one direction and the flag is the shape formed when the market moves sideways.
The flag pattern is considered a continuation pattern, indicating that after a brief consolidation phase (the flag), the previous trend is likely to resume.
Flags are often observed during strong price movements, either upward (bullish flag) or downward (bearish flag), and they provide traders with insights into potential future price movements.
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