In Smart Money Concepts, the term “Reaccumulation” can be a synonym for the term “Flag” in Bull Flag Pattern. Also, “Redistribution” in a Bearish Trend can be a synonym for the term “Flag” in Bear Flag Patterns.
What differentiates Redistribution and Reaccumulation from Flag Patterns is the fact that Flags only refer to the stage the market is at during their formation.
Meanwhile, Redistribution and Reaccumulation go into much more depth. They explain why the consolidation is taking place. They also forecast how long this consolidation could last based on price action, giving you the Market Narrative. They help forecast more accurately where to place a trade entry at a much better price, allowing to have a lower-risk entry.
The price seeks liquidity 24/7, and without liquidity, there wouldn’t be any market movement. So when the market moves in a specific direction for a while (Bearish Trend), the market reaches a point where it has exhausted all the present liquidity.
So, the market has to retrace or consolidate to allow large institutions the opportunity to build on their already profitable positions before the price continues in its direction to the next liquidity zone.
These movements in the price we call “Institutional Order Flow“.
Institutional Order Flow means the direction in the flow of orders of large financial institutions.
When Institutions are Net Long, we would have a Bullish Trend. When Institutions are Net Short, we would have a Bearish Trend.
The fact that there are fluctuations between Net Longs and Net Short orders in the markets causes fluctuations in Liquidity and price movements.
But when there is not enough liquidity to allow large institutions to enter the market, the price goes into a Consolidation. We call this consolidation “Reaccumulation” in a Bullish Market or “Redistribution” in a Bearish Market.
However, one important thing to consider is that Bull Flag and Bear Flag Patterns work only when they are in line with the direction of the Institutional Order Flow.
Next, we will go more in-depth on how to find highly accurate and high-probability entries. We will use Smart Money Concepts (Order Block or Fair Value Gap) to enter when a Bull Flag or Bear Flag forms.
But for now, let’s see how we can identify the Bull Flag and Bear Flag patterns on the chart.
