What is a bullish flag?

Bullish flags are formations occur when the slope of the channel connecting highs and lows of consolidating prices after a significant move up is parallel and declining. The trend before the flag must be up.

What does a bearish flag mean?

The bearish flag indicates a likely drop in price as the asset pattern shows attempts to stay above current levels. The bear flag is inverted. Other indicators like RSI and MACD are also used to measure the momentum of the asset to continue in its path or take a different price development route. They validate flag and pennant patterns.

How do you identify a bull flag and a Bear Flag pattern?

Both bearish and bullish flag patterns can be identified during strong uptrends and downtrends, respectively. Here are five steps on how you can draw a bull flag and bear flag pattern – Identify strong upward (or downward) sloping bars that are formed one after the other in a particular time frame.

How to trade a bearish flag pattern?

Hence, when trading the bearish flag pattern, traders can exit the market at the closing candlestick’s price at the breakout level. However, when trading the bullish flag pattern, traders can enter the market at the opening candlestick’s price at the breakout level. 4. Place the stop-loss order