Currency Trading Trend Types - Flag, Pennant and Rectangle Patterns
In this section we teach you how to use certain currency trading patterns to know how to further invest in the market. Reading currency trading charts is perhaps the most important skill for technical analysis, and all it takes is to learn to recognize the right currency trading patterns. In this section we cover three of these trend types - Flags, Pennants and Continuation Rectangles.
Flag Trend Patterns
Flag patterns are continuation patterns that occur quite frequently in currency trading. Flag patterns are seen as a long currency trend, followed by a short turn in the opposite direction, and finally a continuation of the previous direction. Flag patterns are named that because of the flag shape that is created by the currency price regression.
Online Trading Foreign Currency requires trader to be aware of how charts are analyzed, not only in general and through guessing, but by a true recognition of the different trend patterns that the charts are built on. This is what we will describe next.
Pennant Trend Patterns
Pennant patterns are similar to flag patterns, when the difference is that the trend line during the phase of regression is narrowing instead of parallel. They are viewed as a long price move, followed by a regression period with a narrowing price line. This narrowing price line gives the pennant pattern the appearance of a pennant.
Rectangle Trend Patterns
This pattern is seen with a preliminary trend, followed by a horizontal prize move and finally with the continuation of the previous trend.
Posted by Greg Paster