The flag is a trend continuation pattern. It starts with an impulse 1 move which
represents the poll followed by a consolidation which retraces the initial
move this forms the flag. after the flag has been broken in the direction of the
first impulse move you would look for a second impulse move stretching the
length of the first.
Conventional way to trade a bullish flag pattern:
-----Breakout-----
(1) Wait for a clear Flag Pattern to form.
(2) Buy a break of previous high.
(3) Stop below the flag Low.
(4) Target is a 100% extension of the first impulse move.
-----PullBack-----
(1) Wait for a clear Flag Pattern to form.
(2) Wait for price to break and close above previous high.
(3) Buy pullback at previous high. (Usually happens 1 candle after the break)
(4) Stop below the flag Low.
(5) Target is a 100% extension of the first impulse move.
Conventional way to trade a Bearish flag pattern:
-----Breakout-----
(1) Wait for a clear Flag Pattern to form.
(2) Sell when price breaks the previous low.
(3) Stop above the flag high.
(4) Target is a 100% extension of the first impulse move.
-----PullBack-----
(1) Wait for a clear Flag Pattern to form.
(2) Wait for price to break and close below previous low.
(3) Sell pullback at previous low. (Usually happens 1 candle after the break)
(4) Stop below the flag Low.
(5) Target is a 100% extension of the first impulse move.
represents the poll followed by a consolidation which retraces the initial
move this forms the flag. after the flag has been broken in the direction of the
first impulse move you would look for a second impulse move stretching the
length of the first.
Conventional way to trade a bullish flag pattern:
(1) Wait for a clear Flag Pattern to form.
(2) Buy a break of previous high.
(3) Stop below the flag Low.
(4) Target is a 100% extension of the first impulse move.
-----PullBack-----
(1) Wait for a clear Flag Pattern to form.
(2) Wait for price to break and close above previous high.
(3) Buy pullback at previous high. (Usually happens 1 candle after the break)
(4) Stop below the flag Low.
(5) Target is a 100% extension of the first impulse move.
Conventional way to trade a Bearish flag pattern:
(1) Wait for a clear Flag Pattern to form.
(2) Sell when price breaks the previous low.
(3) Stop above the flag high.
(4) Target is a 100% extension of the first impulse move.
-----PullBack-----
(1) Wait for a clear Flag Pattern to form.
(2) Wait for price to break and close below previous low.
(3) Sell pullback at previous low. (Usually happens 1 candle after the break)
(4) Stop below the flag Low.
(5) Target is a 100% extension of the first impulse move.