What is a flag?

This is the absolute best of the best darn indicator on the planet! Pay close attention because 60% of my work is done with this. I will simplify all of the nonsense you may have read on the internet.

It doesn’t matter if its called a flag or pennant. Get that one down first. they are ALMOST IDENTICAL. Price must be skyrocketing or falling like a rock for this to have super high probability.

Here is what it looks like.

Now you see the upward motion, A PAUSE... and then an upward motion again in the uptrend?

This pause is THE FLAG.

This is when traders are taking profits and other traders are going short. When the momentum picks up again, the trend will continue most of the time. If the pause is too long, it is no longer a flag.

You see the downtrend and how it reacted the same way? It works in a downtrend as well.

I can not tell you how far it will move but one thing is for certain…

If you follow the rules I am about to give you, your entire trading career will turn around in one day…

Rule 1 – Wait for price to start going parabolic such as you saw in the picture. Price really has to be moving..

Rule 2 – Wait for a consolidation (a flag).

Rule 3 – Draw a trend line at the high (for an uptrend).

Rule 4 – Place a limit order 1 pip above the trend line.

Rule 5 – Measure the distance from the bottom of the consolidation and use that as your profit and stop, as shown in the following picture.

Rule 6 – Let it run its course.

There are all kinds of ways to make this chart pattern better and you will learn those as you continue your studies into this wild wiggly world of wonder called trading.
What is the difference in a FLAG and a CONSOLIDATION?
Many turd out there try to complicate it but here is the skinny…

If the consolidation is short and tight, it’s a flag.
If the consolidation is wide and takes a while, it’s just a consolidation

But guess what? You can trade them EXACTLY the same! Have a look!

Happy Trading!