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Identifying continuation patterns

Identifying continuation patterns

Scrolling around some charts this morning, I came across an example of a potential bull flag on the weekly US Dollar Index . Bull flags occur when a market has rallied strongly higher and this is followed by a short period of consolidation, think about what a flag attached to a flagpole looks like and this is essentially the pattern. They are complete when the market closes above the top of the flag.

Being able to identify some basic technical analysis patterns can really help in your trading decision making. A bull flag suggests the break, as the name implies, should be to the topside. Patterns can help you decide whether to maintain a long position and just as importantly when to add to it. A close above the top of the flag will complete it and the ‘flagpole’ will give you an upside measurement or target for your trade.

On this example a close above 97.00 would complete the flag pattern and offer an upside measurement to 100.00 +

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