Elearnmarkets - Financial Market Learning
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Learn On Elearnmarkets
Elearnmarkets - Learn Stock Market, trading, investing for Free
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Learn On Elearnmarkets
Elearnmarkets - Learn Stock Market, trading, investing for Free
No Result
View All Result
Home Technical Analysis
Flag Pattern - What are Bullish & Bearish Flag Chart Pattern 1

Flag Pattern – What are Bullish & Bearish Flag Chart Pattern

Elearnmarkets by Elearnmarkets
November 3, 2022
in Technical Analysis, Charts, Patterns & Indicators
Reading Time: 8 mins read
0
30.2k
VIEWS
Share on FacebookShare on TwitterShare on WhatsApp

A flag pattern is a type of chart continuation pattern that shows candlesticks contained in a small parallelogram.

It is an area of consolidation which shows a counter-trend move that follows after a sharp price movement.

The pattern consists of between five to twenty candlesticks.

In this blog, we will be discussing the formation of this pattern as well as how to trade with this pattern.

Table of Contents
What is a Flag pattern?
What is Bullish Flag Pattern?
What is the Bearish Flag Pattern?
Formation of Flag Pattern
Trading with Flag Pattern
Key Takeaways

What is a Flag pattern?

As the name suggests, this pattern looks similar to a flag or a flagpole.

After a sharp price movement, either upward or downward when the prices enter in a consolidation phase then the flag pattern may be formed.

Join TMP Join TMP Join TMP

It basically indicates that the prevailing trend is going to continue.

This pattern allows traders to enter the market in the middle of the trend.

The breakout of prices in its prior trend helps the traders to enter the market at lower prices than the prices before the formation of the pattern.

Depending upon whether the market is in an uptrend or downtrend, it can either be bearish or bullish.

What is Bullish Flag Pattern?

When the prices are in an uptrend a bullish flag pattern shows a slow consolidation lower after an aggressive uptrend.

This indicates that there is more buying pressure moving the prices up than down and indicates that the momentum will continue in an uptrend.

Traders wait for the price to break above the resistance of the consolidation after this pattern is formed to enter into the market.

Learn to Identify Trend Reversals with Candlesticks in just 2 hours by Market Experts

The breakout indicates that the prior uptrend will be continued.

What is the Bearish Flag Pattern?

When the prices are in the downtrend a bearish flag pattern shows a slow consolidation higher after an aggressive downtrend.

This indicates that there is more selling pressure moving the prices down rather than up and indicates that the momentum will continue in a downtrend.

Traders wait for the price to break below the support of the consolidation after this pattern is formed to enter in the short position.

Formation:

Here is the formation of bullish and bearish chart patterns:

Flag Pattern

Trading with Flag Pattern:

Traders can enter into a trade when the price breaks above or below the upper or lower flag trend lines.

It is formed when there is an increase in the demand or supply that makes the prices move up or down.

In the case of a bullish flag pattern, an increase in supply stops the prices to rise.

Due to this the prices may swing down and form a flag pattern.

When the demand is more than supply, price breaks outside the flag above the resistance, and prices continue to move upwards.

Learn to Identify Trend Reversals with Candlesticks in just 2 hours by Market Experts

In the case of the bearish flag pattern, an increase in demand stops the prices to fall.

Due to this the prices may swing up and form a flag pattern.

When the supply is more than demand, price breaks outside the flag below the support, and prices continue to fall.

Example:

Here we can see the formation of a bullish pattern after a strong uptrend in the daily chart of GMM Pfaudler Ltd.

We can see how the prices broke out above the upper trend line and prices continued to move upwards.

flag pattern

Price Target:

The price target depends upon the distance between the parallel lines that create a flag.

Suppose the flag is 20 pips wide, then the target price will be adding 20 pips with the breakout price in case of bullish pattern and subtracting 20 pips with the breakout price in case of the bearish pattern.

Stop Loss:

A stop-loss can be placed outside the flag on the opposite side of the breakout.

Frequently Asked Questions

How do you identify a flag pattern?

After a sharp price movement, either upward or downward when the prices enter in a consolidation phase then the flag pattern may be formed.

What is the difference between flag pattern and pennant?

The pennant pattern is identical to the flag pattern the only difference is that the consolidation phase of a pennant pattern is characterized by converging trend lines rather than parallel trend lines.

How can I differentiate flag pattern with trend reversal?

A flag pattern is a type of chart continuation pattern and it does not indicate trend reversal.

How reliable is the flag chart pattern for long-term investing?

Generally flag pattern is a short term pattern. For long term investing traders can look for other chart patterns like Inverted H&S and channel.

Do “bear flag” and “bull flag” patterns always happen in the stock market?

Yes “bear flag” and “bull flag” patterns usually happen in the stock market. One should look at an area of consolidation which shows a counter-trend move that follows after a sharp price movement.

Key Takeaways:

  • A flag pattern is a type of chart continuation pattern that shows candlesticks contained in a small parallelogram.
  • When the prices are in an uptrend a bullish pattern shows a slow consolidation lower after an aggressive uptrend.
  • When the prices are in the downtrend a bearish pattern shows a slow consolidation higher after an aggressive downtrend.
  • It is formed when there is an increase in the demand or supply that makes the prices to move up or down.

In order to get the latest updates on Financial Markets visit our website https://stockedge.com/

Happy Learning!

Tags: bearish flag patternbullish flag patternchart patternenglishFlag Patterntechnical basics
ShareTweetSend
Previous Post

5 Best Ways to Deal with Stock Market Fear

Next Post

The Complete Guide on Sector and Industry Analysis

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

Technical Analysis in Stock Trading 2
Technical Analysis

Technical Analysis in Stock Trading

May 31, 2023
5.7k
The Ultimate guide to Trading Divergences 3
Technical Analysis

The Ultimate guide to Trading Divergences

May 26, 2023
911
Trading Psychology: Guide to Master Your Mind in 5 Steps 4
Technical Analysis

Trading Psychology: Guide to Master Your Mind in 5 Steps

May 24, 2023
2.9k
Trading Psychology: 7 Keys to Successful Trading 5
Technical Analysis

Trading Psychology: 7 Keys to Successful Trading

May 22, 2023
2.9k

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Follow Us

Facebook-f Twitter Instagram Linkedin-in Youtube Telegram

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

Download App

Categories

  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Technical Analysis
  • Marketshala
  • Miscellaneous

Popular On Elearnmarkets

  • Market Superheroes:
  • Vivek Bajaj
  • Chetan Panchamia
  • Ashish Kyal
  • Premal Parekh
  • Abhijit Paul
  • Jegan
  • Sivakumar Jayachadran
  • Vishal Malkan
  • Jyoti Budhia
  • Vivek Gadodia
  • Vishal Mehta
  • Piyush Chaudhry
  • Santosh Pasi
  • Gomathi Shankar
  • Market Superheroes:
  • Vivek Bajaj
  • Chetan Panchamia
  • Ashish Kyal
  • Premal Parekh
  • Abhijit Paul
  • Jegan
  • Sivakumar Jayachadran
  • Vishal Malkan
  • Jyoti Budhia
  • Vivek Gadodia
  • Vishal Mehta
  • Piyush Chaudhry
  • Santosh Pasi
  • Gomathi Shankar
  • Courses:​
  • Options Trading
  • Dow Theory
  • Momentum Trading
  • Stock Investing
  • Stock Market for Beginners
  • Harmonic Chart Patterns
  • Algo Trading
  • Elliot Wave Theory
  • Advanced Excel
  • Cryptocurrency
  • NSE Certification Course
  • Courses:​
  • Options Trading
  • Dow Theory
  • Momentum Trading
  • Stock Investing
  • Stock Market for Beginners
  • Harmonic Chart Patterns
  • Algo Trading
  • Elliot Wave Theory
  • Advanced Excel
  • Cryptocurrency
  • NSE Certification Course
  • Webinars:
  • Bank Nifty Scalping
  • Intraday Trading Strategies
  • Options Trading Strategies
  • Options selling
  • Price Action
  • Relative Strength
  • Tax Planning
  • Options Buying
  • Growth Stocks
  • Portfolio Management
  • Relative Strength Index
  • Risk Management
  • Renko Charts
  • Crude Oil
  • Traders Psychology
  • Moving Average
  • Multibagger Stocks
  • Webinars:
  • Bank Nifty Scalping
  • Intraday Trading Strategies
  • Options Trading Strategies
  • Options selling
  • Price Action
  • Relative Strength
  • Tax Planning
  • Options Buying
  • Growth Stocks
  • Portfolio Management
  • Relative Strength Index
  • Risk Management
  • Renko Charts
  • Crude Oil
  • Traders Psychology
  • Moving Average
  • Multibagger Stocks
  • Free Learning Modules:
  • Intraday Trading
  • Options Scalping
  • Swing Trading
  • Financial Modelling
  • RSI Indicator
  • Bollinger Bands
  • Pricing of Futures
  • Personal Finance
  • Initial Public Offerings (IPO)
  • Value Investing
  • Technical Indicators
  • Candlesticks
  • Chart Patterns
  • Option Greeks
  • ELSS Funds
  • Banking and Insurance
  • Real Estate
  • Gold
  • Free Learning Modules:
  • Intraday Trading
  • Options Scalping
  • Swing Trading
  • Financial Modelling
  • RSI Indicator
  • Bollinger Bands
  • Pricing of Futures
  • Personal Finance
  • Initial Public Offerings (IPO)
  • Value Investing
  • Technical Indicators
  • Candlesticks
  • Chart Patterns
  • Option Greeks
  • ELSS Funds
  • Banking and Insurance
  • Real Estate
  • Gold
  • Book Summaries:
  • Rich Dad Poor Dad
  • Psychology of Money
  • The Intelligent Investor
  • The Richest Man in Babylon
  • Think and Trade Like a Champion
  • Value Investing and Behavioural Finance
  • Trading in the Zone
  • Learn to Earn
  • Book Summaries:
  • Rich Dad Poor Dad
  • Psychology of Money
  • The Intelligent Investor
  • The Richest Man in Babylon
  • Think and Trade Like a Champion
  • Value Investing and Behavioural Finance
  • Trading in the Zone
  • Learn to Earn
  • Tools:
  • CAGR Calculator
  • SIP Calculator
  • eLearnOptions
  • Future Value Calculator
  • Present Value Calculator
  • Atal Pension Yojana
  • Cost of Delay Calculator
  • Become a Crorepati
  • Tools:
  • CAGR Calculator
  • SIP Calculator
  • eLearnOptions
  • Future Value Calculator
  • Present Value Calculator
  • Atal Pension Yojana
  • Cost of Delay Calculator
  • Become a Crorepati

© 2023 Elearnmarkets. All Rights Reserved

  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling
  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

Get Elearnmarkets App

No Result
View All Result
  • Article Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • Hindi
    • Bengali
    • English
  • Courses
  • Webinars

© 2020 Elearnmarkets All Rights Reserved