What is a Bull Flag?

A Bull Flag pattern occurs during an uptrend. It starts with a sharp run up. This sharp run is called the flag pole. then it stays between a very narrow trading range. When it breaks out of that range it gives us a buy signal. Let me give you an example, this stock has a sharp run up then stays between $68 and $77.5.

target It is said that the target for a bull flag is found by adding the flag pole to resistance to find the target. In this example the flag pole is $72-$66=$6. Resistance is $78. So the target would be about $84.

A professional trader might enter the stock on the breakout with a target around $84 and a stop loss order under the resistance level which the stock just broke through.

Other Chart Patterns

There are some other patterns that can predict price movement. Learning them can give you an edge and help you develop a strategy based on facts. Here are a few chart patterns that you can look for on a stock chart.

Wolf Wave - This can be a bullish continuation pattern.

Flat Base - A common continuation pattern where the stock cools off for a few weeks before heading back up.

Descending Triangle - A short term bearish signal on a stock.