Bullish Flag Chart Pattern
Bullish flag or bull flag is a bullish trend continuation chart pattern indicating the continuation of an existing bullish trend after a small pause. The pattern is a very reliable one and is highly welcomed by day traders and swing traders; in fact often one can see more than one bull flag in a strong uptrend. Bullish flag formation resembles bullish pennant chart pattern, but the difference is that here the price forms two parallel trendlines or a rectangular shape opposed to the price convergence in pennant formation.
The bullish flag formation has two components - a pole or mast, and the flag. The pole is formed when the price rises sharply to a new high; and is usually fundamentally triggered. The flag is the consolidation phase where the price rises and falls within a short range. The flags can be horizontal, formed because of strong support and resistance levels, but are often slightly declined. Then the prices breakout to continue the uptrend and the prices advance to new highs.
Volume tends to decline as the flag forms but the breakouts are noticeable with considerable rise in trading volume. If there is no significant volume increase in breakout, the reliability of the pattern is greatly challenged. The pattern usually stays for a short-term, and is usually completed within four weeks. Lengthier patterns are also less reliable. Traders can buy stocks once the prices breakout. The immediate target price can be the upward length of the pole from the breakout.
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The bullish flag formation has two components - a pole or mast, and the flag. The pole is formed when the price rises sharply to a new high; and is usually fundamentally triggered. The flag is the consolidation phase where the price rises and falls within a short range. The flags can be horizontal, formed because of strong support and resistance levels, but are often slightly declined. Then the prices breakout to continue the uptrend and the prices advance to new highs.
Volume tends to decline as the flag forms but the breakouts are noticeable with considerable rise in trading volume. If there is no significant volume increase in breakout, the reliability of the pattern is greatly challenged. The pattern usually stays for a short-term, and is usually completed within four weeks. Lengthier patterns are also less reliable. Traders can buy stocks once the prices breakout. The immediate target price can be the upward length of the pole from the breakout.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
8:21 AM
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