Beware of the Sloping Flag: Looks Can Be Deceptive
The sloping flag appears similar to the traditional pattern we discussed, but with a different angle. This has led to confusion in Forex trading, as some mistook it for a bull flag pattern.
The EURUSD Daily chart displayed an upward sloping flag. This pattern indicated trend exhaustion rather than a continuation of the uptrend. The consolidation area should have faced away from the momentum to be considered a bullish continuation.
The second example occurred on the AUDUSD daily time frame, featuring a larger and more prominent upward sloping flag. Traders who understood the implications of this pattern could have avoided buying a false break above resistance and being trapped on the wrong side of the market.
Sloping flags, similar to rising and falling wedges, often signal a reversal or exhaustion. While not every structure breaks in the opposite direction of the trend, understanding the probabilities helps traders stack the odds in their favor.
Consolidation periods vary in shape and size, but continuation patterns typically form against the trend. This happens because more traders aim to book profits rather than take fresh short positions. The angle at which consolidation forms plays a role, with steeper moves lower indicating a healthy consolidation period likely to continue the current trend.
When sellers don't liquidate, hindering new participants from selling at inflated prices, a sloping flag pattern emerges, representing unhealthy consolidation.
Remember that the angle at which a flag pattern forms is crucial. To be considered a continuation pattern, the flag must point in the opposite direction of the prevailing trend. However, exceptions exist for every technical pattern and strategy, including the sloping flag, which sometimes breaks in the direction of the major trend.
The sloping flag appears similar to the traditional pattern we discussed, but with a different angle. This has led to confusion in Forex trading, as some mistook it for a bull flag pattern.
The EURUSD Daily chart displayed an upward sloping flag. This pattern indicated trend exhaustion rather than a continuation of the uptrend. The consolidation area should have faced away from the momentum to be considered a bullish continuation.
The second example occurred on the AUDUSD daily time frame, featuring a larger and more prominent upward sloping flag. Traders who understood the implications of this pattern could have avoided buying a false break above resistance and being trapped on the wrong side of the market.
Sloping flags, similar to rising and falling wedges, often signal a reversal or exhaustion. While not every structure breaks in the opposite direction of the trend, understanding the probabilities helps traders stack the odds in their favor.
Consolidation periods vary in shape and size, but continuation patterns typically form against the trend. This happens because more traders aim to book profits rather than take fresh short positions. The angle at which consolidation forms plays a role, with steeper moves lower indicating a healthy consolidation period likely to continue the current trend.
When sellers don't liquidate, hindering new participants from selling at inflated prices, a sloping flag pattern emerges, representing unhealthy consolidation.
Remember that the angle at which a flag pattern forms is crucial. To be considered a continuation pattern, the flag must point in the opposite direction of the prevailing trend. However, exceptions exist for every technical pattern and strategy, including the sloping flag, which sometimes breaks in the direction of the major trend.
Trade active:
TP: 1.055
Comment:
Comment:
this feels like it's taking forever, patience is key (hope I still have it)
Comment:
Given the unrest in EU at the moment, Santa might bring 1.01 for Christmas this year :)
Trade closed: target reached:
Good one!
Patience is key
Patience is key