Bullish Flag Pattern
Learn to recognize and trade a bullish flag pattern through interactive charts.
What is a bullish flag pattern?
A bullish flag, also called bull flag, marks a consolidation phase after a sharp upward move in price. You can expect the price to fall between 38% and 50%, before resuming its uptrend.
Bullish flag duration
A flag is a short-term pattern, which tends to occur over 1 to 3 weeks, as the price consolidates. If a pattern lasts much longer, it may be invalid.
Bullish flag characteristics
This pattern looks like a flag at the end of a pole.
- The flag pattern rests on a pole, which represents a strong prior upward move in price. Remember that a flag pattern cannot occur without a pole.
- The flag consists of two parallel trendlines running in the opposite direction of the pole. In the case of a bull flag, these lines will go down, thereby retracing part of the prior rise in price.
- The flag can retrace anywhere between 38% and 50% of the pole, without invalidating the prior uptrend. These numbers are drawn from the Fibonnaci sequence.
Trading volumes should rise as the pole forms in order to legitimize the advance. Volumes should fall as the flag pattern forms. This indicates that selling pressure is drying up, and lays the ground for future increases in price.
Bullish flag trading tips
Look for the price to breakout from the upper trendline to confirm the Bullish Flag pattern, before going long. The breakout should ideally be accompanied by rising volumes. The greater the volumes, the more likely it is that the trend will continue.
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