Detecting Flags In Intraday Charts by Markos Katsanos
Can you apply flags to intraday charts? Once you do, how can you determine the optimal price target? Here is a system that will help you identify flag formations as well as enter and exit them at the right time.
It's been nine years since I wrote my first article on flags and pennants for this magazine and I still get emails from readers about it. In fact, judging by the amount of emails Iíve received, it has been one of my most popular articles. Some readers asked me at the time if flags and pennants work as well on intraday charts as they do on daily charts. I had no idea if they did, but this gave me a reason to investigate.
Before I proceed with the statistics and test design for this investigation, for the benefit of new readers I will mention a few words about these formations. Flags and pennants can be categorized as continuation patterns because they break out only from the prevailing trend. They usually represent brief pauses in a dynamic market and they are typically seen after a steep, quick move.