Flag Formation and Pennant Formation are trend reversal formations that are very close to each other in appearance. Pennants are similar to triangles and are formed by the compression of price movements. The flag is interpreted just like Pennant and is formed after sharp price movements.
What is Flag Formation?
The Flag Pattern, also known as the Pennant, is a market analysis pattern that looks like triangles. They occur when price movements undergo a sharp change and, as a result, become compressed. It can be said that pennants are formations that are formed for a very short time and confirm the continuation of the trend. Usually there is a short pause in an uptrend or downtrend, and then the trend continues with the same strength in the direction where the pennant was broken.
Flag Formation can be examined under the same heading as it is interpreted in the same way as Pennant. It consists of visually parallel support and resistance lines. They are seen in a short time like pennants and as a result of sharp price movements.
Flag and Pennant are formations that can be evaluated in a shorter term than triangles. In addition, they differ due to their extensions called “pillars”. The pole is formed by the right-angle and hard up/down movement experienced before the formation occurs. Generally, with the completion of the formation, the price is expected to move up or down as much as the pole length. As with all formations, the trading volume is of course an important indicator.
