The bearish flag pattern is a common technical analysis pattern that is used by traders to identify potential trend reversals or continuation. This pattern forms when there is a sharp downward move (the flagpole), followed by a brief period of consolidation (the flag), before another downward move.
In the case of the USDCAD pair, we can see that the pair has been on a downtrend for some time and has recently experienced a sharp downward move. The flagpole is formed by the length of the sharp downward move, which is usually quite significant.
After the sharp downward move, the price of USDCAD started consolidating, forming a rectangle or parallel channel, which is known as the flag. This consolidation period is usually characterized by decreasing trading volume and volatility.
Once the price breaks below the lower trendline of the flag, it signals a continuation of the previous downward trend. Traders may use this as an opportunity to enter short positions in anticipation of further downside momentum, which is exactly what we're planning to do here.
The short target is not fully determined yet, but aiming for the closest major support zone is always a safe bet. Hope this was educational and useful at the same time! Feel free to ask more questions :)
In the case of the USDCAD pair, we can see that the pair has been on a downtrend for some time and has recently experienced a sharp downward move. The flagpole is formed by the length of the sharp downward move, which is usually quite significant.
After the sharp downward move, the price of USDCAD started consolidating, forming a rectangle or parallel channel, which is known as the flag. This consolidation period is usually characterized by decreasing trading volume and volatility.
Once the price breaks below the lower trendline of the flag, it signals a continuation of the previous downward trend. Traders may use this as an opportunity to enter short positions in anticipation of further downside momentum, which is exactly what we're planning to do here.
The short target is not fully determined yet, but aiming for the closest major support zone is always a safe bet. Hope this was educational and useful at the same time! Feel free to ask more questions :)
