High tight flags are considered to be less common than other chart patterns. If you’re serious about bull flag trading —  and I think you should be — then rising bull flag use a trading platform with a bull flag pattern screener. It will look for all the right conditions based on news, trading volume, and price movements.

Consider using a Libertex demo account that allows traders to practise without any risk for their funds. The account provides real-time trading conditions and a wide range of CFDs trading underlying assets. The bull flag isn’t a difficult pattern that can occur at any time and for any asset.

Pros of using the bullish flag

There are plenty of patterns technical traders see in the markets. We’ll focus on the more common trend continuation patterns—bull flags, pennants, and ascending triangles—and explore what they might be signaling in the markets. We’ll also go over basic setups that make them tradable.

We use the same GBP/USD daily chart to share simple tips on trading bullish flags. The breakout occurs once the buyers reassume control of the price action after a temporary pause in the uptrend. In this example, we enter the market as soon as the breakout candles close above the flag’s resistance.

Identification Guidelines for Bull Flags

Moving average crossovers on any time frame supply important buy and sell signals. Coupling these different tools makes for a clearer picture. https://www.bigshotrading.info/blog/forex-leverage-what-exactly-is-leverage/ You’ll find trading difficult if you rely on one pattern to tell the story. That’s why it’s so important to see patterns within patterns.

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Upstart ($UPST) forms a High Tight Flag pattern

When it comes to making big money in trading, the trend is your friend. Master risk management and
become an expert forex trader. To minimize the chance of losing money to a false breakout, make use of tools such as trading indicators and try to be patient.

In a downtrend a bear flag will highlight a slow consolidation higher after an aggressive move lower. This suggests more selling enthusiasm on the move down than on the move up and alludes to the momentum as remaining negative for the security in question. A trading target from the breakout is often derived by measuring the height of the preceding trend (flagpole) and projecting a proportionate distance from the breakout level. In an uptrend a bull flag will highlight a slow consolidation lower after an aggressive move higher. This suggests more buying enthusiasm on the move up than on the move down and alludes to the momentum as remaining positive for the security in question. In this guide, we’ve defined the bull flag pattern broadly.

The breakout suggests the trend which preceded its formation is now being continued. Bearish flags are the opposite of bull flags and represent what investors believe to be a downward trend of the stock. The bear flag has a notable dip in the stock, followed by a consolidation and then a continuation of the downtrend. Candlesticks alone do not form support and resistance areas! You can use moving averages and part of your trading plan to form a complete picture.

• Waiting for a candlestick to close outside of the flag tends to add credence to the breakout, and can help the trader mitigate risk.
• Still, if the price doesn’t decline by more than 38%, there’s a higher chance the major trend will continue.
• If you grew up with a strong penchant for connecting stars and identifying constellations, then you might be naturally “hardwired” for identifying market patterns.
• The break of the flag, which occurs in the third stage of the bull flag pattern, offers the optimal entry signal.
• Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
• Ideally you’d like to see price continue and break above the top of flag pole.

A bull flag forms when there is a steep increase in the price of a market, followed by a period of rangebound and consolidation price action. Then, after the period of consolidation, the upward trend continues. Once the new breakout begins, it’s a good idea to wait for confirmation. It’s also a good idea to have a price target for getting out of your position.