Bull Flag Trading Pattern Explained

As a provider of educational courses, we do not have access to the personal trading accounts or brokerage statements of our customers. As a result, we have no reason to believe our customers perform better or worse than traders as a whole.

Open to Public Investing is a wholly-owned subsidiary of Public Holdings, Inc. (“Public Holdings”). Bull Flag Pattern Securities products offered by Open to the Public Investing are not FDIC insured.

Pros and Cons of a Bull Flag Pattern

Instead, buying at the upper side means that bulls are usually in control. They’ll be used to define when the price will turn around and continue moving up. If the retracement is below 50%, it’s not a flag pattern. The retracement shouldn’t be lower than 38% of the trend.

The bear flag pattern is typically seen as a bearish signal, as it suggests that the asset’s price is likely to continue to decline. This is because the sharp decline in price is often followed by a period of selling pressure, as traders and investors look to capitalize on the downward momentum. The bull flag pattern is complete when the price breaks out of the consolidation range and begins to trend upwards again. This is typically seen as a signal to buy, as it suggests that the uptrend is likely to continue. Another pattern that resembles the bullish flag pattern is called a pennant.

How to Use the Bull Flag Pattern

A bull flag will most often have a downward trajectory instead of a horizontal and level consolidation. For example, the best bull flags occur at the start of a new uptrend. So, the earlier you are in a bull run or momentum swing, the better your bull flag should perform. However, once the stock has had a chance to pull back and consolidate, the bull flag should produce a breakout, allowing the stock to resume its prior momentum. This means that sellers were still far fewer than buyers. In other words, there are more traders willing to buy the flag than sell it.

Following all impulsive moves in the market is either a stark reversal or a period of consolidation. The flag of this pattern is such consolidation and is what you will be looking for to find this pattern. This pattern is reliable, consistent, and common. It is found anywhere from the daily chart to the 5-minute chart, and as such, it is a pattern that all traders should be aware of. The cryptocurrency has formed the pole after a robust rise in relative volume.

Bullish flag strategies

In most cases, this usually happens during a period of low volume. A second variation is the descending flag pattern. This is a true pullback from the top of the flagpole.

Measure the distance between the start of the trend and the consolidation. The stop loss can be placed below the bottom line of the bull flag. The Stop-Loss order should be placed below the support line of the bull flag. Thus, the Take-Profit order can be too far in the highly https://www.bigshotrading.info/ liquid market. The pattern can be applied to the Forex market, stock, cryptocurrencies, commodities, etc. I want you to promise me that you will do your work by tweaking, backtesting, and demo trading these strategies consistently first before risking your hard-earned money.

Chart Pattern Bullish Flag

To define key levels, measure the difference between the start and end points of the uptrend . The Take-Profit target should proportionate this distance. In the end, the price should break above the upper boundary of the pattern. The correction should start, and the price should drop. With this strategy, your technical analysis skills will be tested. In this case, you want to use the 50-period moving average as your trailing stop loss.

The flag can take the shape of a horizontal rectangle and is often angled in a downward position away from the trend. The pattern formed by inverting the bull flag stock pattern is called the bear flag stock pattern. A pennant is a symmetrical triangle that is formed in a horizontal consolidation pattern. As the pennant narrows into its apex, it can be difficult to determine which direction it will resolve. A bull flag doesn’t typically form an apex, nor is it completely symmetrical.