The Bull Flag Chart Pattern Explained
A formation consisting of a small number of price bars where the slope of price bar highs and lows are parallel and declining.
A Bull Flag is identified by their characteristic pattern and by the context of the prior trend.
In the case of a Bull Flag the trend leading to the formation of the Bull Flag is up.
Bull Flag Volume
The volume is strong on the move up into the bull flag high. The move into the high is called the flag pole.
The volume drops off as the market consolidates in a sideways down ward sloping pattern which is the flag part of the bull flag chart pattern.
When the bull flag low is made and the market starts to move back higher with the trend volume will pick up and a new bull move starts.
Here is a chart showing how the volume works on a bull flag chart pattern.
How to Trade a Bull Flag Trendline Break
When the bull flag starts to form the flag part of the pattern you can draw a trendline above the highs of the flag.
You can buy when :
- there is a trendline breakout
- or wait for a close above the trendline
Waiting for a close above the trendline gives you extra confirmation that the flag low is in and that is is a good trendline break.
Here is a chart showing how to trade a trendline break on the bull flag chart pattern.
VIDEO ON HOW TO TRADE FLAGS