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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.



In this example the stock eventually breaks above $77.5. When we find the bull flag pattern and decide to use it to our advantage, we are buying the stock when it breaks out at $79. Then we hold onto it for about a month for this example. At this time the stock is trading at $92.5. This will give us a $13.5 profit or a 17% increase. All of this happening within a single month. Now that's impressive!



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.

HAPPY TRADING!

Remember to develop your own strict trading system, in addition to using proper money management skills.

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