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Tuesday, August 08, 2006

Our gold pattern continues to tighten up. Now we definitely have the tightening range type of breakout pattern we want to look for on a long side entry in this market. The seasonal tendency favors an upmove as well here.

I have bracketed the pattern for those who are not familiar with the flag terminology to see that it resembles a flag when presented like this.

This is a very basic continuation pattern that traders have used for years.

2 comments:

lisa said...

Thanks Chris, I understand the flag now. Also, thanks for your blog on cotton - I have been watching cotton and was pleased to see your comments.

Chris Johnston said...

Lisa,

How to actually enter the flag trade is discretionary. Just a simple breakout above the line is how most people do it. Some people like to front run the entry and buy it before it breaks out to get a "better" price.

That is risky as often it can touch the lines on both sides several times and go the other way. Generally, you put a stop below the low of the flag.