Bull Flagging Lesson
The easiest chart pattern to spot as well as our favorite to execute is the bull flag. The science behind it is that it is a continuation pattern. Stocks can’t go straight up, so a bull flag is seen as a consolidation period within an uptrend, where the stock is just waiting to make its next move higher. The concept is as simple as A-B-C:
- The stock uptrends →
- A consolidation period begins as the stock creates a bull flag →
- The stock ‘breaks out’ as it begins its next leg higher in the uptrend
Bull Flags are categorized as continuation patterns. They represent brief pauses in stocks looking to take a breather after a run. They are typically seen after fast, big moves. The stock then usually takes off again in the same direction once necessary consolidation has occurred. The technical buy point is when price penetrates the upper trend line, or resistance, of the flag area. You want to see this occur as volume is expanding. Simply put, you want to buy through resistance on increased volume. The increased volume is your confirmation that huge buyer’s (funds) are on the same side of the trade as you.
The same goes for a bear flag, just flipped. The technical sell point is when price penetrates support as volume is expanding.
This is the first pattern you want to master. We see thousands of traders fail simply because they’re so-so at everything under the sun.
I asked a new trader recently “what do you trade?”
“I trade gappers, earnings, options, forex, currencies (same thing I know), bitcoins, equities, leveraged etfs, shorting, day trading, binary options and penny stocks! What do you trade?!” said the new trader.
My response: “Technical setups in stocks above $30 a share.”
Keep it simple, if you cannot master one set up, being shitty at 45 will do you nothing in the long run. Master one. When you think you’ve mastered a proper game plan in a Bull Flag let's hear it in your chat and see if you mastered it. Let's take a quick break and learn how Shake made over 70% in ANAB simply buying a bull flag breakout and being patient for 2 months as it trended higher.
Do you have balls?
In the Getting Started Group Chat post 5 daily charts that you feel are Bull flag and your game plan for how you would trade them (entry, stop, target). If you really have balls draw out the resistance line you are looking to buy through (your entry) and a line showing your out (your stop). Now if this seems like a lot of work, realize we do this all day long for each and every trade.
POST IN THE GETTING STARTED CHAT