9 SMALLER PRICE PATTERNS AND GAPS

Most of the price patterns described in Chapter 8 can be observed in both reversal and continuation formations. The majority of the formations discussed in this chapter materialize during the course of a price trend and are, therefore, of the continuation variety. Since many of them are reflections of controlled profit-taking during an advance and controlled digestion of losses during a decline, these patterns, for the most part, take a much smaller time to form than those described in the previous chapter. They most commonly appear in the daily charts.

Flags

A flag, as the name implies, looks like a flag on the chart. It represents a quiet pause accompanied by a trend of declining volume, which interrupts a ...

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