Flags

Flags: Flags are consolidation areas after a market has made a move. They usually last 3 or 4 days and move generally against the move that the market has just made. Flags after a move up are called bear traps, because they give the impression that the move is over, and bears will enter the market only to be stopped out when the market resumes its trend. Flags after a move down are called bull traps, because they give the bull the impression that the move down is over, only to stop the bull out when the down move continues. Figure 10 also exhibits some examples of flags and their resulting moves.