Bull Flag Pattern: What It Is and Trading Strategies for 2023

Bull Flag Pattern

It is critical to place stop-losses to protect our portfolio if the market reverses on some fundamentals. We have a basic stock trading course, swing trading course, 2 day trading courses, 2 options courses, 2 candlesticks courses, and broker courses to help you get started. It’s important to treat day trading stocks, options, futures, and swing trading like you would with getting a professional degree, a new trade, or starting any new career.

These are stocks that we post daily in our Discord for our community members. Our traders support each other with knowledge and feedback. People come here to learn, hang out, practice, trade stocks, and more. Our trade rooms are a great place to get live group mentoring and training. The cup part of this pattern occurs when the price begins to move up but eventually reaches a point where it stalls out for some time before continuing its trend upwards.


When the lower trendline breaks, it triggers panic sellers as the downtrend resumes another leg down. Just like the bull flag, the severity of the drop on the flagpole determines how strong the bear flag can be. The flagpole forms on an almost vertical panic price drop as bulls get blindsided from the sellers, then a bounce that has parallel upper and lower trendlines, which form the flag.

Bull Flag Pattern

So it’s important to decide if you want to learn to trade those as well. If you feel like you missed a quick rally or a breakout, https://www.bigshotrading.info/ a bull flag can open up another entry opportunity. Pennants can be trickier to play than bull flags as they merge into a point.

Advantages and disadvantages of a bullish flag

Overall, both are bullish patterns that facilitate an extension of the uptrend. The question is when to buy if you see a bull flag pattern emerge. You could buy in the consolidation phase where the stock is hitting resistance and support levels but this is a risk.

It’s generally advisable to wait for a candle to close beyond the breakout point before creating any orders to avoid being burned by a false signal. Most traders will enter a flag pattern trade on the day after the price has broken beyond the trend line. Typically, the price will rise to test the resistance level before dropping and closing near its opening price. The bear flag pattern can be seen in all time frames, but it is more common to see it in lower time frames as opposed to higher ones because of how quickly it develops. The ascending triangle pattern is basically similar to the bull flag pattern, and there is just a minor difference. In both cases, we have an initial movement on high momentum and high relative volume making new highs, and then a consolidation begins that stays in the upper third of the flagpole.

Bull Flag Pattern

This can be seen as a “cup” shape on the chart, with the bottom being where the stall occurred and the sides representing how long it took for prices to move back up after that stall. The length of Bull Flag Pattern the flagpole can be used to determine the price target of the breakout. The information contained on this website is solely for educational purposes, and does not constitute investment advice.

Bull Flag Pattern

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Bull flag candlesticks often look like they can be a part of a larger pattern. For example, you may find them within bullish patterns like the cup and handle pattern or inverse head and shoulders pattern. That’s why spending time with experienced traders is important so they can point out these imperfect patterns for you in the wild. As with other price action patterns, the bearish version of the pattern, signaling the continuation of a downtrend, is just a reverse of the bullish version of the pattern. U.S. Government Required Disclaimer – Commodity Futures Trading Commission. Futures and options trading has large potential rewards, but also large potential risk.

  • In conclusion, the bull flag pattern can be a powerful tool for traders and investors looking to capitalize on a potential continuation of a bullish trend.
  • A second strong move up after that consolidation is also necessary.
  • The left shoulder is formed first and is simply a recent high.
  • If you only want to trade bull flags and there’s no bull flag then … just stay away.
  • In this example you have AMC breaking out of its prior trading range on increased volume.

As you’d expect, the pennant looks like an elongated triangle with the 2 sides of the pennant equal and meeting at the tip. The formation of both the flag pattern and the pennant may take weeks to form. The most important component of any flag pattern trade is the entry.

The pattern is considered to be bullish, as it typically forms during an uptrend. However, some traders believe that the pattern is not reliable, as it can occasionally form during a downtrend. While there is no definitive answer to this question, most traders agree that the pattern is more reliable when it forms during an uptrend. Consequently, many traders use other indicators to confirm the direction of the trend before entering a trade based on a bull flag pattern.