Bullish and Bearish Flag Patterns Stock Charts

In the example below, both represented an equal distance of 500 pips. Allowing you to identify the highest probability trade setups and trade the market profitably. So, to give you more perspective on things, you should look at the left side of the chart and find if any liquidity zones have been taken out.

If the asset continues to move in the direction of the consolidation, it’s unlikely that the chart will form a bull flag pattern, as the trend of the flag pole has continued to reverse. If the asset instead moves in the direction of the flag pole, then a bull flag pattern has been identified. The bear flag chart pattern strategy only looks for trading opportunities when you get a breakout below the flag price structure to be a seller. The truth about trading chart patterns is that they come in many different sizes. So, no two bear flag patterns will look the same – there will always be some slight variations.

Check Our Daily Updated Short List

This is the point at which, after a strong move in price, the market consolidates for a period of time. The length of time is irrelevant, however do note that longer consolidation periods tend to lead to more aggressive breakouts. However, its bearish alternative has the same components. The difference is that a bearish Bear Flag Pattern flag is the exact inverse of the illustration above. Using both Flag patterns in technical analysis is a great way to be able to trade the market. However, what most retail traders struggle with is to stay consistent with their results while trading them; and this is mostly because of the way they are being traded.

It is used to predict the continuation of a bearish trend. It is a powerful tool, but just like any other element of technical analysis, it should not be used in isolation. Since bull and https://www.bigshotrading.info/s represent that an asset is overbought or oversold, respectively, they’re often combined with various technical indicators, like the RSI. It signals the extension of a prevailing downtrend after a temporary pause in price action has been completed.

Chart Patterns Bull and Bear Flags

Still, it doesn’t mean that all of the signals it provides will be 100% accurate, especially when you trade cryptocurrencies. To limit potential losses in case the price defies the pattern’s rules, use risk management techniques. The stop-loss is one of the most basic yet powerful risk management tools that you may implement. Another great method is to follow the 1% rule, which suggests that you should not spend more than 1% on a single trade.