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Lock in those singles and remember to sell into strength. With this pattern, buying the breakout is the easy part. The flag formation may rising bull flag not complete as you expect. This is a particular case of the bull flag in which the line along the top of the bull flag slopes up.

• We did not buy on that day, but we added $UPST to the newsletter watchlist after the bullish reversal candlestick formed.
• Risk capital is money that can be lost without jeopardizing ones financial security or life style.
• You can start the projection from the base of the flag or the breakout point.
• However, some analysts say the pattern does not qualify as a bull flag, and traders are running ahead of themselves in making bold predictions based on it.
• Unlike a bullish flag, in a bearish flag pattern, the volume does not always decline during the consolidation.

In a bull flag pattern trading, crypto traders place the entry where the structure that frames the flag fails to maintain its downward momentum after the bullish pattern has been spotted. As mentioned earlier, the bull flag is a continuation pattern. Therefore, we are looking to identify an uptrend – the series of the higher highs and higher lows. The second step in spotting the bull flag pattern is monitoring the shape of the correction. The above image also has the flag’s upward-sloping channel highlighted in a blue shaded color and the downside breakout point encircled in orange for clarity. Finally, it shows how the height of the flag pole is projected downwards from that breakout level to determine the maximum price target for taking profits.

How to spot a bull flag pattern?

A bull flag pattern is characterized by a flag of consolidation that is horizontal or sloping downward and is followed by a substantial increase in the upward direction or the breakout. In volatile cryptocurrency market conditions, traders use crypto trading strategies like swing trading and a bull flag pattern for trading during a strong trending market or after a breakout. Pattern recognition is a cornerstone of technical analysis and one of the most useful tools for traders operating in financial markets. The bear flag pattern has long been a popular and reliable trading signal used by technical traders in the markets to identify the likely continuation of a downtrend.

On the other hand, the prolonged consolidation phase, which takes the correction below 50%, can result in a reversal pattern. Again, the strongest bullish flags have corrections ending around 38.2% Fibonacci retracement level. In this blog post we look at what a bull flag pattern is, its key elements, and main strengths and weaknesses. Moreover, we https://www.bigshotrading.info/ share tips on how to trade a bull flag and make profits. Bull flag patterns are a great setup for new traders to learn because they are easy to spot and trade once you understand the mechanics behind them. When I trade a bull flag stock pattern, the biggest difference from a flat top breakout is that the consolidation is occurring BELOW the high.

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It’s not uncommon to see the term “pennant” whenever there’s mention of flag patterns. Pennants are identical to flags in that they’re characterized by converging lines during a consolidation, after which a large price movement occurs followed by a continuation. The only difference is that the consolidation of a pennant pattern features converging rather than parallel trend lines.