An ascending flag is a continuation pattern. The ascending flag is formed by two straight upward parallel lines which are shaped like a rectangle. It is adjusted in the direction of the trend that it consolidates. Contrary to a bullish channel, this pattern is quite short term and marks the fact the seller will need a break.
The formation of an ascending flag will occur in a downward trend. Often, this break will occur halfway through the movement.
The target calculation will be compared to the previous trend. A calculation of the height of the overall downward trend is before the formation of the ascending flag and then extends higher on the last highest point of the pattern.
A graphical representation of an ascending flag follows:
Here are some statistics about the ascending flag pattern:
– In 87% of cases, there will be a downward exit.
– In 90% of cases, the ascending flag is a continuous pattern.
– In 62% of cases, the target of the pattern is reached .
– In 76% of cases, the ascending flag occurs when the price is at the lowest third of its annual range.
– In 10% of cases, a pullback occurs on the support.
The more the previous movement precedes the formation of the flag holds powerful, the more the bearish breakout will continue to be strong.
The performance of an ascending flag is much less important when it is oriented in the direction of the trend.
A flag with narrowed lines is more performing than a flag with outspread lines.
A flag is more powerful if there is no false breakouts.