How to Trade Bull and Bear Flag Patterns

I’ll share with you practical trading strategies that will answer all of these questions. Therefore telling you that an uptrend is about to occur potentially. But for the sake of consistency, master trading one type of trend first by having trades clocked in.

But there are similarities, and you can trade them the same way. This flag is right at the top of the flagpole, and the following breakout is beautiful. If the stock can break out of consolidation, that’s when it’s time to trade. Bull is used to describe an upward trend in a stock or index. If a stock is bullish, that means its price is going up.

  • Such a trading approach usually doesn’t perform as well because of a high likelihood of a pullback.
  • That way, you protect your investment when the market is highly volatile.
  • Confirm the pattern by observing the downward trend resuming after the flag.
  • Did you know there are traders out there that trade one strategy?

Traders can use technical analysis tools like moving averages and the RSI to identify bull flags, and can enter long or short positions depending on market conditions. The bull flag pattern signifies a potential continuation of a bullish trend. It indicates that after a period of consolidation, buyers are likely to push the price up again, potentially resulting in further gains. Traders and investors can use this pattern to make informed decisions about entry and exit points, as well as to manage risk effectively. A Bull Strategy is a trading strategy that aims to profit from an upward trend in the market.

The support and resistance lines dip for the length of the flag before shooting up in a breakout through resistance. When trading a bull flag I prefer to wait for confirmation that the flag is complete. A bear flag can follow when the market doesn’t support another breakout.

What Does Bullish Flag Tell Traders

This is a great lesson on managing risk and respecting your stops. Never assume that any pattern in the market will work 100% of the time. Always set your stop and move on if the trade doesn’t go in your favor. 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. You then can set your stop at the lows of that prior candle.

  • And after the fakeout, it fizzled out and cracked under the stop.
  • The resistance is the most important thing to watch on a bull flag pattern.
  • If you see active growth, then a downward consolidation in the form of a parallelogram or a rectangle, and then a strong rebound, you can say with certainty that this is a bull flag.

Together these charts illustrate the favourable volume patterns traders will be looking to identify into a bull flag, which assumes continued price gains to follow. In fact, we have someone in our trading service that trades strictly bull flags. Harmonic patterns are used in technical analysis that traders use to find trend reversals. By using indicators like Fibonnaci extensions and retracement… You want to see a strong move upward in prior days to form the “pole” of the flag.

How to trade the Bull Flag Pattern — The First Pullback

See our Summary Conflicts Policy, available on our website. The high volume into the move lower (flagpole) and low volume into the move higher, are suggestions that the overall momentum for the market being traded is negative. This furthers the assumption that the preceding downtrend is likely to continue.

Profit Target for Pennant & Flag Pattern

We also recommend taking our interactive forex trading patterns quiz to test your knowledge of some of the most commonly used patterns in forex trading. I’ve now just learnt the bull flag trading guide and I’ll share my experience after practicing it. I have missed out big time trading opportunities for not knowing it earlier. Then wait for a good bull flag pattern to form with your stop loss below the lows of the pattern.

With this strategy, we are going to use the bear flag within a multi-timeframe context. As the new impulsive trend wave loses momentum, the price, once again, goes over into a bull flag during the corrective wave. After the breakout from the first flag, the trend continued higher with a second impulsive trend wave.

Bull Flag Pattern Examples

Nonetheless, for a pennant pattern to be bullish, you want it to have similar characteristics to a bull flag with regard to volume. The only real difference is that the pattern will be creating higher lows and lower highs into the apex. As you can see from the image above, the context is everything when comparing a bull flag to a bear flag. That being said, they are both very similar and should be treated almost identically, just in different trending contexts. A bull flag means that there is a pause, albeit brief, in the upward momentum of a stock’s move to higher prices.


And, this appearance makes it a user-friendly, easy-to-identify chart pattern. The bull flag and bear flag represent the same chart pattern however, just mirrored. The reliability of the bull flag pattern depends on the success of the checklist mentioned above. When all components of the bull flag are identified and present within the chart, the bull flag pattern is considered to be a formidable pattern to trade. So in a downtrend, I’ll choose to skip the trade even if there’s a bull flag pattern formed. We hope this helps you in your trading journey and education in the markets.

Harmonic Patterns in Stock Trading for Beginners

We are much more than just a place to learn how to trade stocks. Yes, we work hard every day to teach day trading, swing trading, options futures, scalping, and all that fun trading stuff. But we also like to teach you what’s beneath the Foundation of the stock market. We don’t care what your motivation is to get training in the stock market. If it’s money and wealth for material things, money to travel and build memories, or paying for your child’s education, it’s all good.

We know that you’ll walk away from a stronger, more confident, and street-wise trader. We also offer real-time stock alerts for those that want to follow our options bull flag pattern trading trades. You have the option to trade stocks instead of going the options trading route if you wish. Our traders support each other with knowledge and feedback.

You can use a tool like the 50-period moving average to trail your stop loss and only exit the trade if the market closes beyond it. The Bull Flag Pattern usually appears in a strong trending market, or just after it breaks out of a range. These pullbacks usually have shallow retracement as not many traders want to trade against the strong momentum. So… when the market finally breaks out, traders who miss the move can’t wait to enter on the first sign of a pullback.

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