A bull flag is a continuation pattern that occurs as a brief pause in the trend following a strong price move higher. The bull flag chart pattern looks like a downward sloping channel/ rectangle denoted by two parallel trendlines against the preceding trend.
During this period of consolidation, volume should dry up through its formation and resolve to push higher on the breakout. The actual price formation of the bull flag resembles that of a flag on a pole hence its namesake.
HOW TO IDENTIFY A BULLISH FLAG
It can be complex identifying a bull flag on a chart because the pattern entails several different components. Traders will need to correctly identify and understand these components to trade this pattern successfully. Key things to look out for when trading the bull flag pattern are:
1.Preceding uptrend (flag pole)
2.Identify downward sloping consolidation ( bull flag )
3.If the retracement becomes deeper than 50%, it may not be a flag pattern . Ideally, the retracement ends at less than 38% of the original trend
4.Enter at bottom of the flag or on the breakout above the high of the upper channel boundary
5.Look for price to break higher with a length potentially equal to the size of the flag pole
During this period of consolidation, volume should dry up through its formation and resolve to push higher on the breakout. The actual price formation of the bull flag resembles that of a flag on a pole hence its namesake.
HOW TO IDENTIFY A BULLISH FLAG
It can be complex identifying a bull flag on a chart because the pattern entails several different components. Traders will need to correctly identify and understand these components to trade this pattern successfully. Key things to look out for when trading the bull flag pattern are:
1.Preceding uptrend (flag pole)
2.Identify downward sloping consolidation ( bull flag )
3.If the retracement becomes deeper than 50%, it may not be a flag pattern . Ideally, the retracement ends at less than 38% of the original trend
4.Enter at bottom of the flag or on the breakout above the high of the upper channel boundary
5.Look for price to break higher with a length potentially equal to the size of the flag pole