Intermediate – Bullish and Bearish Flags

Intermediate – Bullish and Bearish Flags

Jan 06,2020

What are Bullish and Bearish Flags?

Bullish flags formations occur when the slope of the channel connecting lower highs and lower lows of consolidating prices following a significant move up is parallel and declining. The trend before the flag must be up.

Bearish flags formations occur when the slope of the channel connecting higher highs and higher lows of consolidating prices following a significant move down is parallel and rising. The trend before the flag must be down.


Why are Bullish and Bearish Flags important?

Flags imply that the market cannot decide whether to break up or down. Once the flag is broken by the price, there may be a substantial move in the direction of the breakout.


So how do I use them?

Flags can be used to interpret large breaks in price. If the price breaks through the flag to the downside, there may be a large move down. Similarly, if the price breaks through the flag to the upside, there may be a large move up. We may use these to help identify trend or to confirm a Gartley or butterfly pattern.

Share :

Follow Regain capital

latest articles