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Bearish Flag Pattern on Qantas Airways(QAN)
As traders, we use technincal analysis as a reliable method for speculating on future price direction of both equities (shares) and indexes. Technical Anyalysis in simple terms is the study of historic price movements in a chart in search of patterns or consistantly traded support and resistance levels. Today we are looking at a specific chart pattern that falls under continuation patterns, the Bearish Flag Pattern.
Appearance: A Bearish Flag pattern is comprised of:
- A strong rise of bearish momentum with the volume rising and share price falling.
- A break of the downtrend line and a sideways to bullish period where the share price starts to fall slightly, and the volume of trading decreases from the recent strong trend.
- The breakout of the sideways to bullish movement and then a sharp fall once again. The volume should also accelerate after breaking out of the channel, or pennant.
Important Note: Be aware, this pattern could be the stock taking a breather or the direction is about to change to head Bullish. Wait to see the reverse to the downside and make sure the volume starts to increase.
Example: Qantas Airways
Qantas showed this exact pattern just over a month ago. The stock has had a strong run up in recent years, but in the last few months has had a bit of a sell off. The volume started to weaken as the channel continued, then increased with the break out of the support channel. The following bearish move down has continued, and we seem to be falling further now. There may have been a chance for a second flag to form around the end of last month, but the share price quickly continued its move lower and now sits at 8-month lows.
There are many ways that you could take advantage of these patterns. As a specialist in derivatives, we are able to profit on a stock when it falls as well as when it rises.
If you would like to learn how to pick a stocks direction, then Join us at our live face to face one day “Technical Analysis, Picking the Direction of a Stock” course.
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Regards,
Benjamin Farkas