What is this pattern
Flag
- Continuation Bull/Bear Pattern
note in the image how bear flags apear bullish and bull bearish but with reducing volume
What Shape Flags Perform Best
- Tall
- Wide (not too long)
- Falling Volume Trend (see image)
- Light Breakout Volume
- Draw 3 Bull Flag Variations and their targets.
- what makes it a bull flag?
- what is a good entry?
- what should volume usually do
2. Price should be abnormally steep (pole) into the pullback (flag)
3. Often there will be a liquidity hunt/fake out to the downside bellow support before the move up
this can be a good entry
4. usually there is decreasing volume before the breakout
- Draw 3 Bear Flag Variations and their targets.
- what makes it a Bear flag?
- what is a good entry?
- what should volume usually do
- what can be a sign of weak price on the break out or a fail
- Price must move straight down before (pole) into the pullback (flag)
- Often there will be a liquidity hunt/fake out to the upside above resistance before the move up
this can be a good entry, or on a retest of the break
- Unlike a bullish flag, in a bearish flag pattern, the volume does not always decline during the consolidation (but often does). The reason for this is that bearish, downward trending price moves are usually driven by investor fear and anxiety over falling prices. The further prices fall, the greater the urgency remaining investors feel to take action
- long drawn out flags that drag on can fail or signify weak moves on the breakout
What is this structure
High and tight flag
What is this pattern
Pennant
- Draw 3 Bull Penant Variations and their targets.
- what makes it a Bull Penant?
- what is a good entry?
- what should volume usually do
- what can increase success
Continuation Pattern
good on low time frames 1min 5min etc
- two touches each side, price moving straight up beforehand
- enter at invalidation of A (fakeout) or retest of the breakout (B)
4.
- upward breakout - rising volume (Ushaped is good)
- downward breakout - falling volume
- Tight patterns (more touches), patterns forming on top of support or at least not under resistance.
- penant size should look proportional to the size of the surrounding move
BE CONSERVATIVE WITH THE TARGET (take profit early watch for levels)
Pennant in bear markets breaking down are slightly more sucessful
- Draw 3 Bull Penant Variations and their targets.
- what makes it a Bull Penant?
- what is a good entry?
- what should volume usually do
- what can increase success
Continuation Pattern, good on low time frames, 1min 5min etc
- two touches each side, price moving straight up beforehand
- enter at invalidation of A (fakeout) or retest of the breakout (B)
4.
upward breakout - rising volume (Ushaped is good)
downward breakout - falling volume
- Tight patterns (more touches), patterns forming on top of support or at least not under resistance.
- penant size should look proportional to the size of the surrounding move
BE CONSERVATIVE WITH THE TARGET (take profit early watch for levels)
Pennant in bear markets breaking down are slightly more sucessful
What is the best scenario for a Bull/Bear Pennant
and explain the psychology
Bull:
at the tight point more supply comes onto the market (break down)
the supply is bought up fast, buyers that have been waiting jump at the oportunity.
sellers back right off seeing the bullishness of the pattern.
the result is a surge up in price.
(failied break down/trend reversal. failed patterns are very bullish in the opposite direction)
a tight stop loss can be placed under the failed breakdown
what 2 ways could you trade a Bull Flag
- Trade the Breakout.
- Stoploss just under the break
- or stoploss under the bottom (ok if a very tight bull flag)
the idea is its a pause and explosive move up so if it fails then you probably wanted a tight stop because its not the move you were expecting
- get the fake out. buy on the re-entry of the fakeout.
- Stop loss under the bottom of the fake out.
this is the best trade as there was a reversal failure, you get a good entry and a tight stop
Explain the what is happening in each flag, which is the best and why
- tight flag but highs not as high as the pole.
- sellers are driving down price taking profits and buyers are not interested in the high price
- tight and high-
- lots of buy pressure, every time price falls its bought up fast (BEST FLAG)
- Large differences in highs and lows in the flag-
- buyers and sellers ranges varying a lot. may turn out to not even be a flag if it fluctuates too much
Flags are best as high (close to pole top) and tight as possible. represents lots of buying pressure
