Flag limit is a technical analysis tool used in supply and demand trading to identify potential levels of support and resistance. It is based on the idea that when price moves in a certain direction, it creates a flag or pennant-shaped pattern. The flag is formed when price consolidates in a narrow range, and the limit is identified by drawing a horizontal line at the top and bottom of the consolidation. The upper limit represents potential resistance, while the lower limit represents potential support. Traders can use this tool to identify potential entry and exit points for trades and to set stop-loss and take-profit levels.
