Flag Pattern

Posted in Finance, Accounting and Economics Terms, Total Reads: 501
Advertisements

Definition: Flag Pattern

A term related to technical analysis, a flag is a shape (pattern) in stock prices of a company. A sudden decline or rise in stock price of a company followed by a price which is within a narrow range for some time and then again a sudden rise or fall, opposite to that of the previous action. Hence, making a shape of flag.

 

Explanation

Technical analysis primarily deals with the shape of curves. Flag is a special type of shape which can be observed in stock price movements. The shape closely resembles the shape of a flag hence the name FLAG. When a share price of a company suddenly rises or falls followed by a price within a narrow range for some time. Then the analysts believe that such movement will again be followed by a steep rise or fall. Whichever is opposite to the first movement, complete action is defined as a flag shaped curve.

 

Example:


As we can see from the above picture the price of the stock rose at start and then remained within a range for some time. The flag shape has been highlighted above.


Hence, this concludes the definition of Flag Pattern along with its overview.

Advertisements

Browse the definition and meaning of more terms similar to Flag Pattern. The Management Dictionary covers over 7000 business concepts from 6 categories.

Search & Explore : Management Dictionary



Share this Page on: