However, our team at Trading Strategy Guides has developed a more conservative approach to spot tops and bottoms by using the following reversal trading strategy: We have to answer to an important question: The bullish flag pattern is a powerful technical pattern that can develop from the lowest time frame possible 1-minute TF all the way up to the monthly chart.
More, the bullish flag pattern is a universal pattern that can show up in all markets. Not only that the bullish flag pattern is a very simple technical indicator, but it can lead to moves that are of the same magnitude as the flag pole movement.
How to trade the bullish Flag pattern is as simple as the bullish flag pattern itself. Since this is a continuation pattern we want to trade in the direction of the prevailing trend. So, as the name suggests — bullish Flag pattern — we should expect a bullish move to come out of this pattern.
Zooming out your charts you will be able to spot the bullish flag pattern much faster. We recommend all the time to play with the charts and zoom out so you can better identify the bullish flag pattern.
Following this step, it will also make it visually a little bit easier to plan your next move. Most trading platforms come with a technical tool that can help you draw a parallel channel and highlight the flag pattern. On the TradingView platform, our preferred trading platform, the channel tool is located on the right hand-side panel: Next, we need to figure out where we need to get into the trade, which brings us to the next step of the best Flag pattern strategy.
We have got a really solid looking bullish flag pattern here that follows exactly the rules highlighted in the Bullish Flag Pattern Explained. So, now we can safely enter at the immediate breakout above the flag. Alternatively, you can wait for a breakout and only enter after a pullback that retests the flag.
This is a more conservative approach. In our example, we would have missed a great opportunity if we would have waited for a pullback to enter a trade. First, we measure the distance the price traveled from the starting point of the bullish flag pattern to the flag and project that move to the upside.
We can see that we have a good profit target of approximately pips and if we measure the same amount from the breakout point and project it to the upside we get our profit target. Now that we have a good understanding of where to take profits, there is still one more thing left that we need to take care of, which brings to the next step of the best Flag pattern strategy.
A break below the flag will automatically invalidate the bullish flag pattern structure. Use the same rules — but in reverse — for a sell trade. You should now know how to trade bullish flag pattern like a professional trader.
But, not only that, your profit potential is multiple return of your risk. In essence, you risk a little to gain a lot more which is the thing that most traders should strive for. Before you sign out, make sure you also read our 2 Keys to Success to further enhance your trading experience. Now … We have to answer to an important question: Well, the simplest answer is NONE. Bullish Flag Pattern Explained The bullish flag pattern is a powerful technical pattern that can develop from the lowest time frame possible 1-minute TF all the way up to the monthly chart.
The bullish flag pattern is constructed in two parts: A strong and sustained rally. Followed by a tight range that slowly drifts lower to form the flag portion of the bullish flag pattern. Another characteristic of this tight range is that it should be contained within two parallel lines.
How to Trade Bullish Flag Pattern How to trade the bullish Flag pattern is as simple as the bullish flag pattern itself. Again, remember this is a continuation pattern. Zoom out Your Charts and Mark on the Consolidation Zone — The Flag — of the Bullish Flag Pattern We recommend all the time to play with the charts and zoom out so you can better identify the bullish flag pattern. Step 2 Enter Long Position at the Break of the Flag Pattern We have got a really solid looking bullish flag pattern here that follows exactly the rules highlighted in the Bullish Flag Pattern Explained.
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