A Bull Flag Pattern Trading Strategy A Complete Guide

Bull Flag Pattern

There may be more than just a couple of retracements and recoveries with lower highs and lower lows before a breakout continuing the uptrend occurs. If this is bullish flag, we called it as High and Tight Bullish Flag. This pattern is where you can grow your account https://www.bigshotrading.info/ largely (with risk-calculated). Welcoming you back (after 18-week break) Thanks for your like and supports. As we mentioned above, you want a bull flag to put in a series of lower highs so that you can buy the breakout of the most recent candle’s lower high.

Bull Flag Pattern

Again, you must be already familiar when it comes to plotting support and resistance. That’s why I suggest taking your profits below the next area of resistance you’ve plotted on the chart. At this point, you should be a pro at plotting support and resistance.

How to Trade The Bull Flag Pattern

Other technical analysis tools can be used in conjunction with bull flags. Like any other technical indicator, the bull flag pattern has a collection of unique advantages and disadvantages.

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. Place stop loss below the bottom line (the distance of 3-10 pips depending on the timeframe is highly recommended). In the end, the price should break above the upper boundary of the pattern. The correction should start, and the price should drop. The pattern can be applied to the Forex market, stock, cryptocurrencies, commodities, etc.

How to trade the bull flag pattern

I’ll share with you practical trading strategies that will answer all of these questions. But for the sake of consistency, master trading one type of trend first by having trades clocked in.

  • Therefore, we are looking to identify an uptrend – the series of the higher highs and higher lows.
  • The trendline marking the uptrend’s most recent price movement should have a steep angle.
  • This allows the Market Maker to be on the other side of those positions.
  • The first step to identifying a flag pattern is to find a steep, short-term uptrend.
  • 3.The confirmation phase, in which a breakout is confirmed by the price closing above the upper resistance line, along with sustained follow-through buying above the flag.
  • Allowing you to identify the highest probability trade setups and trade the market profitably.

After a period of consolidation, the flag must resume the upward trend in order to be considered a bullish flag pattern. Otherwise, the pattern fails, which we’ll discuss later in the post. This resumption should be accompanied by the presence of renewed volume . On Phemex, you can combine the bull and bear flag patterns with other indicators to help plan out your trades. The best indicators to combine with flag patterns are popular indicators such as the Relative Strength Index , which can help show if the existing trend is oversold or overbought .

Bullish Flag Formation Signaling a Move Higher

We’ve mentioned the Volume indicator that can confirm the upward trend continuation and the bull flag’s effectiveness. Fibonacci retracements are used as support and resistance levels. The price is expected to retrace at those, so there’ll be a pullback. Here are some steps to help you determine the bull flag pattern. The price corrected for three weeks during the strong uptrend but continued its upward movement later. In general terms, the trading concepts for a bullish flag listed in this guide can be applied to the bearish flag as well. The long entry must be placed at the break of the flag, while the stop-loss order should ideally be placed below the consolidation flag.

The bull flag pattern is one of many trading strategies used by traders either to enter a market on the buy side or as an opportunity to add to existing long positions. The bullish Flag pattern is usually found in assets with a strong uptrend. It is called a flag pattern because it resembles a flag and pole. Pole is the preceding uptrend where the flag represents the consolidation of the uptrend. The flag pattern resembles a parallelogram or rectangle marked by… FL Sample in audusd 30min chart What is the Flag Limit Forex Pattern?

The common way to trade Bull Flags and Bear Flags

You’ll be able to capture trend reversals easily, even if they are short, medium, or long-term downtrends. That’s why if you spot Bull Flag Pattern a sharp move down after the pole has formed, it will take a while for you to confirm that the sellers have not yet taken over.

  • Other technical analysis tools can be used in conjunction with bull flags.
  • No testimonial should be considered as a guarantee of future performance or success.
  • The pattern may be used to buy bullish breakouts or trade the pullbacks of uptrends.
  • The stop loss for this coin is very low and the profit target is very high, which provides a great risk-to-reward ratio.
  • When the price breaks the bull flag pattern’s upper boundary, you should expect the trend to keep rising.
  • While the consolidation shows equilibrium between the forces of supply and demand, it can also be seen as the calm before the storm.

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