Reliance capital formed the bearish flag pole formed between 19th September 2017 and 26th September 2017. The price fell from Rs.850 to Rs.600 within that week forming a steep bearish pole. There on, the price oscillated between Rs.604 (resistance level) and Rs.530 (support level) – forming a flag. The flag formed between 27th September 2017 to 6th November 2017. During the flag formation, the volume was low confirming a lack of fight from bulls and the beginning of domination from the bears.
If the price breaks below the support level of 530, we can enter a short position. Hence the target price is Rs.529. The stop loss should trigger if the price goes breaking above the previous support level, Rs.604. Hence the stop loss can be kept at 605. This will result in a risk of Rs.76. Hence the return should also be Rs.76. So, the target price should be Rs.453. The stock broke below the entry price (529) on 7th November 2017. The volume was also high on the breakout confirming huge domination of bears. The target price achieved on 14th November 2017.
Hi sir,
For flag pattern the duration to form the flag is 4-7 days.
That is right. But I am not sure if that duration is a strict criteria. I have read an article about flag and pennant which states the duration of flag or pennant formation can be 1 to 12 weeks. What I found in this chart is more of a pennant.
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:flag_pennant_continuation