A chart pattern indicating that the market will probably move higher is called a Bull Flag Pattern. There is a bear flag pattern also which shows just the opposite of bull flag pattern. It is a general trend that when one flag pattern is going strong, the other one gets automatically subsided. A trader has to remain very calm and composed because flag patterns need time to completely form the trend lines which show the upper and lower positions of the current status of the market.
Bull signifies the rise in stock prices. The bull patterns help the trader to comprehend the profitability of investing in any stock because this flag pattern brings the real thing in front of the dealers and they are able to make better decisions. Some of the bull flag patterns can also fool a person. It is advisable to patiently react to these flags.
A regular chart reader is a person who has the capability to take the correct decision. The very small and fast flag fluctuations need deep technical analysis so that a trader does not make a foolish mistake because even if these charts show the truth, a newbie can easily be fooled.
If one wants to trade bull flag patterns and make a good amount of money, one can go through the candlestick patterns because these are the best ones when it comes to the ease of their comprehension. There are a few types of flag pattern generally observed in the bullish flag pattern. These are stated as follows-
- Horizontal Rectangle Flags
When the pattern follows a relatively straight line, it is known as a horizontal rectangle flag. The resistance and support points have negligible variation.
- Horizontal Rectangle Angled Down Away (Flag Pattern)
When there is a dip in the pattern before it shoots up between the resistance and support points which gives the pattern a flag like a shape, is the horizontal rectangle angled down away pattern. It usually looks s if it is a drooping flag.
- Bullish Pennants: Symmetrical Triangle
When initially in the pattern, there is a large distance between the resistance and support points which soon minimizes before shooting up again giving the pattern a triangular shape is known as bullish pennants.
The knowledge of these patterns helps the trader to understand everything. These shapes work like analysts for any new trader and help the trader realize the ups and downs of the stock market via these tricky but useful lines.
A very important word in the bull flag pattern trading is patience. Without patience, it can take one down in no time. Patience bears fruit and if any trader will patiently understand and analyze the charts, he/she is sure to get fair gains. Watching for resistance on the bull flag pattern is vital because it can prevent the stock from rallying for a second time. Continuation patterns are considered reliable because they repeat their pattern.
Therefore, bull flag patterns are useful but if studied generously for an ample amount of time. These can give good profits to the one who waits and then takes any action.