The bull flag pattern is found within an uptrend in a stock. This pattern is named for the resemblance of a flag on a pole. The bull flag is a continuation pattern which only slightly retraces the advance preceding it. The technical buy point is when price penetrates the upper trend line of the flag area, ideally on volume expansion.
Context: Found within an uptrend.
Appearance: The advance has solid volume and the upward price action is strong, which forms the vertical look of a flagpole. The resting period and slight retracement is narrow price action with a slight downward tilt or is horizontal (but no upward movement) with volume contracting during the flag portion of the pattern. The flag portion of the pattern has highs and lows which can be connected by small trend lines which are parallel, giving the flag portion the look of a small channel.
Breakout Expectation: The height of the flagpole may be added to the breakout area at the end of the flag to determine the expected advance. This is why the bull flag pattern is often found in the middle of stock advances.
This stock formed a pair of bull flag patterns during its uptrend. Each bull flag was merely a resting period for this stock as it gathered strength to break out and trend higher.
Members of our stock pick service see us make trades from bull flag patterns all the time, as it’s one of our favorite patterns. Come trade with us!
Be sure to learn about the bear flag pattern too.