FLAG

21 January 2019 By PDSNET

This is a fairly rare charting formation which can occur in a upward trend, downward trend or horizontal where the market enters a period of uncertainty and moves sideways for a period before the underlying trend resumes. Consider the example of the Shoprite share (SHP) which displayed an almost perfect downward flag formation in the first two months of 2024:

 

Shoprite: 16th October 2023 - 27th February 2024. Chart by ShareFriend Pro.

 

Here you can see that Shoprite shares made an intra-day high of 27825c on 2nd January 2024 and then began to oscillate between two paralell downward sloping trendlines for the next two months. Both the upper resistance line and the lower support line are connected by three "touch points" making the formation very reliable from a technical perspective. We expect that the formation will end when the share breaks above the upper resistance line in due course.  



Share this glossary term: