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Another continuation pattern that's going to follow the trend either upward and downward or what are
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called flags, right.
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And it's a continuation pattern, but it has a dramatic but brief reversal and it's a real dramatic
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reversal.
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You know, so if your prices are, let's say, down trending and they're going down on a flag, it's
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going to reverse and go.
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The prices are going to go dramatically up for a little bit and then they're going to come back down
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and fall out.
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That reverses.
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Well, we'll see in the example coming up.
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And the whole idea, like a lot of char patterns, say look like something and that's how they get their
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names.
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So looks like a flag or, you know, like a pennant on a flag.
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On a flagpole.
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Right.
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And, you know, it's similar to a triangle cause it's got a shape and all that.
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But it really kind of looks like a flag pin or flag with a flagpole.
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And then you're seeing a sharp rise or fall, depending on which way the trend is going to.
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It's going to go the opposite way for a short time with a sharp rise or fall, depending in going the
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opposite way the trend, and then pick up the trend after that.
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And what you'll see also is that the pole part of it, that's where trading volume is.
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That's where you get this spike up in your chart.
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Really, since this big a large amount of trading volume, a lot of people are trading.
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They're buying and selling the security very frequently.
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So you see a large trading volume at the base of the flagpole and then you can either be at the top
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of the flagpole or at the bottom of the flagpole.
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But the idea of that volume is what it was.
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What's making your flagpole?
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So if we're to look at this chart pattern and and for fun, I threw in an area chart.
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You know, you can see the the top there, the peaks of these mountains are the prices.
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You know, that they're closing prices that they're at on this chart.
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And along the bottom is this volume represented by Green would be an up day and red would be a down
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day as far as the trading on that particular day, on this particular style of chart.
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So you can see the prices then look to the bottom as far as the volume.
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And if you look from left to right, not much is happening, though.
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It does look like we're in a definite downtrend.
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And this those basket on the horizontal bars, the volume, the trading activity, you can see there's
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a big downward dip as far as the trading activity that goes there.
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And then all of a sudden it reaches a bottom and then it shoots back up and then continues the downtrend.
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And if you can kind of see where those green bars are, you've started envisioning a flagpole there,
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starting vision that there's a flagpole.
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There's going to be a reversal of the dominant trend and then at the top might have something looks
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somewhat like a like a pendant around that.
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If we add some lines on here, you can kind of see, you know, where it's that pendant forming.
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It's it's kind of a triangle.
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It's kind of a more of a more more rectangle ish as far as, you know, being more parallel lines.
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But the green lines on the bottom, which is the spike in trading volume, is one thing you need to
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be part of, of a flag pattern.
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You know, your flag needs a flagpole so you can see how it's all of a sudden have this big reversal
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shot way up and kind of forms this flag pole with a pretty big pennant on there.
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In this particular example where there's this big spike and big spike in profits that are SUVs, mean
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prices that come up.
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But then what happens?
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It starts to go back to the original trend.
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That's why this is a considered a continuation pattern.
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So if we put the, let's say, a trend line on top of that, you can see that when once you get past
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this kind of flagpole idea, it's going to go back to that original trend.
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So the way to trade a flag is, let's say you see this dramatic volume, you see this dramatic spike
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up, and you might be able to trade in there early enough to make some profits and then get back out
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right away.
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At least in this one, we're looking at a downward trending one and upward trending flag pole would
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be the would be the opposite around that with an upward trend.
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But typically, when I see flags and really I see them as more because I'm used to the traditional look
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of a flag on a flag pole, I guess it makes it easier for me to see when I'm seeing something in a downward
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trend.
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And I'm really trying to trade on that upward spike is how how I treat it, how most people do it.
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If they also see a flag, something's happened to cause flight.
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That's why the trading volume comes up.
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There's probably some type of event or some news there, milers anticipation of a good earnings announcement
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after a series of bad ones or whether there was a stock or something's going on in the crypto or forex
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market.
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If you're trading those types of securities, something's happened to cause the flag to, you know,
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that big sharp rise.
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But then after that event happens, people are like now, this is still not a great security.
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It needs to downtrend some more.
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And you can see where it picks back up on that trend.
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So flags can be if you see them forming, you can get in soon enough, let's say, especially when you
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have that sharp reversal for the uptrend before it goes back down again can be a great way to get a
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trade in there, make a little profit, maybe quite a bit of profit, and then get out right away because
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it's getting very spiky there.
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Just make sure you get out before the overall continuation trend.
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You know, starts keep keeps going back, you know, as far as, you know, pushing those prices back
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down, let's say if you're buying in more towards the bottom.
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