Flag FinderFlag Finder Indicator is a technical analysis tool to identify bull and bear flags.
What are flags
Flags are continuation patterns that occur within the general trend of the security. A bull flag represents a temporary pause or consolidation before price resumes it's upward movement, while a bear flag occurs before price continues its downward movement.
Both flag patterns consist of two components:
The Pole
The Flag
The pole is the initial strong upward surge or decline that precedes the flag. The pole is usually a fast move accompanied by heavy volume signaling significant buying or selling pressure.
The flag is then formed as price consolidates after the initial surge or decline from the pole. For a bull flag price will drift slightly downward to sideways, a bear flag will drift upward to sideways. The best flags often see volume dry up during this phase of the pattern.
Indicator Settings
Both components are fully customizable in the indicator so the user can adjust for any time frame or volatility. Select the minimum and maximum accepted limits from the % gain loss required for the pole, the maximum acceptable flag depth or rally and the minimum and maximum number of bars for each component.
Colors and what components are visible at any time are also user controlled.
Trading flags
Traders typically use flags to enter on breakouts. A breakout occurs when price moves above the left side high of a bull flag or below the left side low of a bear flag.
Alerts
The Flag Finder allows for four different types of alerts
New Bull Flag
New Bear Flag
Bull Flag Breakout
Bear Flag Breakout
Pine Script
On top of the indicator identifying bull and bear flags, throughout the source code I left notes on nearly every line to help anyone who is interested in pine script see my thought process and explain which each line of code does. This code isn't too complex, but it offers a look into many different concepts one might use when writing pinescript such as:
input groups
declaring and reassigning variables
for loops
plotshapes & lines
alerts
