Definition:
After a strong decline, the market enters a correction in the form of an upward-sloping channel. This reflects temporary resistance from buyers, but the overall trend remains bearish.
Key Characteristics:
- Strong downward impulse.
- Narrow upward channel.
- Decreasing volume during correction.
- Breakout to the downside with acceleration.
How to Trade:
Short entries on the downside breakout. Stop-loss above the local high. Target equals the height of the flagpole.
Common Mistakes:
- Entering without confirmed breakout.
- Trying to trade “against” the pattern.
Conclusion:
A classic tool in algo-systems for trading with the trend.
