Some of the common technical forms appear only during upsurges, and some appear during declines, but there are also some that appear during both upsurges and declines. Among them, the flag shape is like this. It will appear during the ups and downs. It is a relay form, that is, a sorting form in the operation of the trend. Therefore, the flag pattern cannot simply be understood as indicating that the market outlook will rise or fall. Instead, it must be conducted in-depth analysis based on the specific situation at that time to find investment opportunities.
The main reason for the flag pattern is that after the market operates rapidly according to the original trend, the stock price trend encounters resistance from reverse energy. It is mainly divided into two situations: rising and falling. One is that in the process of rapid rise, because the early rise is too large, a lot of profit-making main funds have been accumulated, and there is pressure to cash out. The stock price encounters great selling pressure, and the extent of its decline often exceeds the usual consolidation. What is shown is not a high sideways trading, but a flag pattern with large fluctuations, and its shape also shows the characteristics of a downward trend. After the end of the flag pattern is over, the market will rise again. On the contrary, during the decline, after a period of rapid decline, the energy to rebound appeared. Moreover, due to the large decline in the early stage, more assets were involved, which showed two upward parallel lines, but then moved back. fell below.
The flag shape is different from other forms and has a certain degree of confusion, which means it is often considered to be a reversal of the trend. Because the market has experienced a rapid decline or rise in the early stage, but then has a reverse trend of rise or fall, it is often considered to be a reversal of the stock price trend. Therefore, the flag pattern will prompt some investors to make wrong judgments. But in fact, it is just an intermediate adjustment link in the general trend process, and stock prices will also rise or fall significantly in the future.
In terms of opportunities, whether it is a rising or falling flag pattern, there are certain opportunities for intervention, but the key lies in the timing of intervention and the choice of price. It can be considered that the flag shape is a skewed box shape. Whether it is rising or falling, it is ideal to intervene at the bottom of the box. It should be noted that the intervention price must be very different from the early low point. In its shape It is possible to determine the next bottom before intervention, because the operating characteristics of the market outlook will change after the entire flag pattern is formed. Of course, for that kind of rising flag shape, the stock can chase the rise after the flag shape is clear, because there will still be a considerable rise after that. But if it is a flag pattern in the process of decline, you must exit the market as soon as possible to avoid the risk of the market outlook.
It must be emphasized that, like all technical form analysis, flag patterns also have risks, and there is no guarantee that certain opportunities will be obtained. At the same time, there is also the possibility of mutual changes between all technical forms. After you understand it, the market will often operate in another form. It is only possible to predict in advance which form will be profitable, but it is extremely difficult to do so. . Therefore, generally speaking, to ensure profits, it is best to operate after a clear upward trend has passed. If you make a mistake in judgment, you should exit the market as soon as possible to prevent greater losses.