A bull flag pattern is a chart pattern that occurs when a stock is in a strong uptrend. It is called a flag pattern because when you see it on a chart it looks like a flag on a pole and since we are in an uptrend it is considered a bullish flag.
A bullish flag pattern typically has the following features:
- Stock has made a strong move up on high relative volume, forming the pole
- Stock consolidates near the top of the pole on lighter volume, forming the flag
- Stock breaks out of consolidation pattern on high relative volume to continue the trend
Bull Flags are a subset of our momentum trading strategy and can be used on any time frame. We like trading bull flags on the 2 and 5-minute time frames as a way to scalp short-term price movements.
However, they work just as good on daily charts too and are great for swing trading.