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How to Trade the Flag Stock Setup

There are two distinct types of trading flag formations recognized in chart analysis: the bullish flag pattern and the bearish flag pattern.

If you want to use these chart patterns, you need to learn how to analyze the bullish flag chart pattern and bearish flag setups.

Bull Flag Stock Chart Setup

This pattern on a chart called a bull flag looks like a shape with four sides. The shape is made by a pair of lines that are parallel, which act as levels of price support and resistance until the price goes beyond them. Usually, the bull flag pattern will not be completely straight but will have a slope.

The bull flag setup occurs in an uptrend. This continuation pattern features a small pullback with tight action and a mild downward angle. Buy on the break above the flag's upper line. Highs and lows in the flag connect with parallel lines, forming a slim channel.

The bull flag chart pattern occurs at half-way point of a bullish upwards trend & after a breakout a similar move equivalent to the height of the flag-pole is expected.

Trade a Flag Setup - Index Identify Flag Setup

Trade a Bull Flag Chart Setup?

The bull flag chart design shown earlier was simply a time of rest as the market built up power to push through and climb higher. The continuation signal for trading the bull flag chart design was verified when the upper edge of this flag design was broken toward the top.

Bear Flag Stock Chart Setup

This bear flag setup happens when prices are generally falling. The bear flag chart pattern is a pattern that shows a trend continuing, where the price goes back up a little with small price changes and a slight upward slope. The time to sell is when the price goes below the lower line of the upside-down bear flag chart pattern. The high and low points of the flag part of this chart pattern can be connected with short, parallel lines, making it look like a small channel.

Trade a Bear Flag Chart Setup - Trade a Flag Pattern

Trade a Bear Flag Chart Setup?

The bear flag chart pattern shown earlier represents a pause in the market before continued selling. This pattern confirmed a downside continuation when its lower line was broken.

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