It is always an interesting question: Which amongst the various formations has given consistent results?
Each person following Technical Analysis of the stock has his own favourite formations. In fact, there are very interesting and varying differences amongst those who follow Technical Analysis.
Let us summarise a few of them:
- Some seem to follow ‘Elliot Wave Theory’.
- Some are staunch believers of Japanese Candlesticks.
- Some base their buying and selling based on moving averages.
- Some people go by indicators such as MACD.
- Some chartists believe in formations.
- Some, like me, use a combination of the above except ‘Elliot Wave Theory’ (which I have not studied so far).
Even in formations, people follow daily charts or weekly charts. To give an example, a saucer formation in weekly charts is more powerful than the one in daily charts.
When anyone asks the question on my favourite formation, without batting my eyelid, I say FLAG Formations. Whenever, I see a flag formation in the market or in a particular share, my antenna goes up. I am truly excited by a flag for the following reasons:
- A flag is easy to spot.
- There is a minimum measurable price objective.
- Returns are usually fabulous, when you follow the rules governing flag formations.
- Time taken to reach the objective is by and large short and the R.O.I. is high.
I suggest you read more about flag formations or if you are an expert, please give your views.
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