Technical analysis is the practice of looking at a cryptocurrency price chart and inferring the future from the patterns that have formed in its trend lines. Rob_Stevens_ explains how to spot these patterns: TradingWeek, sponsored by cmegroup
Some dismiss technical analysis as pseudo-science while others have built empires on the techniques, profiting immensely by spotting obscure “” or “Bart Simpson haircut” formations in the charts and taking action before the markets act out their predictions.
There are two types of flags: bull flags and bear flags. Bull flags are flag patterns that trend upward, hinting at a future price rise. Bear flags are those that appear in downtrends, when the analyst that spots them predicts that prices will fall. Flag formations are useful because an analyst could infer that an upward or downward price spiral is about to happen. Check the image on the left in the chart above: The first rise is the “pole.” The flag’s pole rises until traders have decided that enough is enough and it is time to sell.
In technical analysis, the difference between the flag and the pennant is that with flags the trend lines are horizontal, whereas pennant trend lines converge in the shape of its namesake, a triangular flag:Apart from the shape of the consolidation period, the pattern for a pennant is pretty much the same as the flag: There is an upward or downward movement, known as the flagpole, followed by a consolidation period marked by low trading volume that precedes a high-volume breakout.
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