How to Trade the Flag Stock Chart Pattern
There are two types of trading flag chart patterns - bullish flag chart pattern and bearish flag pattern.
To trade these chart patterns one requires to learn about the technical analysis of bullish flag chart pattern and bearish flag trading setup.
Bull Flag Stock Chart Setup
This bull flag chart pattern forms what looks like a rectangle. The rectangle is formed by two parallel lines that act as support & resistance for the price until the price breaks out. In general, the bull flag pattern will not be perfectly flat but it will be sloping.
The bull flag chart setup is found within a upwards trend. In this bull flag chart pattern is a continuation stock chart pattern where the trading market pulls back slightly, it is therefore a slight retracement with narrow price action that has a slight downwards tilt. The technical buy point is when stock price penetrates the upper line of the bull flag chart pattern. Flag portion has highs & lows which can be connected by small lines which are parallel, giving it what resembles a small channel.
The bull flag chart pattern occurs at halfway point of a bullish upwards trend & after a break out a similar move equivalent to the height of the flagpole is expected.
Trade a Bull Flag Chart Setup?
The bull flag chart pattern above was just a resting period as the trading market gathered strength to breakout and move higher. Bull flag chart pattern trading continuation signal was confirmed when the upper line of this flag pattern was broken to the upward side.
Bear Flag Stock Chart Setup
This bear flag pattern is found in a downwards trend. The bear flag chart pattern is a trend continuation pattern where the price retraces slightly with a narrow price action that has a slight upwards tilt. The technical sell point is when price penetrates the lower line of the inverted bear flag chart pattern. The flag portion of this chart pattern has highs and lows which can be connected by small lines that are parallel, giving it what resembles a small channel.
Trade a Bear Flag Chart Setup?
The bear flag chart pattern above was just a resting period for the trading market before more selling. The continuation stock signal was completed as the lower line of this pattern was broken to the down-side.
