Bull Flags are my absolute favorite charting pattern, in fact I like them so much I made an entire page dedicated to the Bull Flag Pattern. This pattern is something we see almost every single day in the market, and it offers low risk entries in strong stocks.
The hard part for many beginner traders is finding these patterns in real-time. These stocks are easy to find using the proprietary stock scanners I have developed and use everyday in our chat rooms.
My Surging Up scanners immediately shows me where the highest relative volume in the market is. I simply review scanners alerts to identify the strong stocks at any given time of the day.
As a pattern based trader, I look for patterns that support continued momentum. Scanners alone cannot find patterns on charts. This is where the trader must use their skill to justify each trade.
Momentum Day Trading Strategies Pattern #1: Bull Flags
With the Bull Flag Pattern, my entry is the first candle to make a new high after the breakout. So we can scan for the stocks squeezing up, forming the tall green candles of the Bull Flag, then wait for 2-3 red candles to form a pullback.
The first green candle to make a new high after the pullback is my entry, with my stop at the low of the pullback. Typically we’ll see volume spike at the moment the first candle makes a new high. That is the tens of thousands of retail traders taking positions and sending their buying orders.
Momentum Day Trading Strategies Pattern #2: Flat Top Breakout
The flat top breakout pattern is similar to the bull flag pattern except the pullback typically has, as the name implies, a flat top where there is a strong level of resistance. This usually happens over a period of a few candles and will be easy to recognize on a chart by the obvious flat top pattern.
This pattern usually forms because there is a big seller or sellers at a specific price level which will require buyers to buy up all the shares before prices can continuing higher. This type of pattern can result in a explosive breakout because when short sellers notice this resistance level forming they will put a stop order just above it.
When buyers take the resistance level out, all the buy stop orders will then be triggered causing the stock to shoot up very quickly and the longs will be sitting on some nice profits when it does!