What is a bull flag pattern?

Bullish flag formations are found in stocks with strong uptrends and are considered good continuation patterns. They are called bull flags because the pattern resembles a flag on a pole. The pole is the result of a vertical rise in a stock and the flag results from a period of consolidation.

Is a bull flag a good signal?

The confirmed bull flag is a very powerful signal and I will be explaining how you can trade it. Both flags and Pennants are quite similar to each other and have proven to be powerful chart patterns in technical analysis. They are considered 'continuation patterns'.

How is a bullish flag pattern different from a pennant pattern?

However, the bullish flag pattern can be distinguished from the pennant pattern by the shape formed by the price action that occurs during the downside retracement prior to the breakout and resumption of the uptrend. A bullish flag pattern creates a downward sloping channel formed by a series of lower highs and lower lows.

How to trade a bullish flag pattern?

Traded properly, it can be among the more reliable technical indicators of a continuation pattern and offer traders a relatively low-risk trade with a favorable risk/reward ratio. The key to successfully trading a bullish flag pattern is to wait for all of the pattern’s necessary elements to appear.