“Bull Flag” is one of the popular price patterns in technical analysis, especially widely used in the crypto market to predict upward trends.
Definition
Bull Flag is a continuation pattern, often appearing during strong bullish market phases.
This pattern resembles a “flag” on the chart, with a strong flagpole representing the uptrend and the flag part indicating a correction or accumulation phase.
Structure of Bull Flag
Flagpole
This is the first part of the pattern, showing a strong and steep uptrend, often accompanied by high trading volume.
The flagpole forms when the price surges over a short period.
Flag
This is the correction or accumulation phase after a strong price increase.
The flag often takes the form of a downward price channel or a horizontal rectangle, with narrowing price ranges.
During this phase, trading volume often decreases.
Meaning
Bull Flag is a signal of trend continuation. After an accumulation phase, the price often breaks out in the direction of the initial trend.
Investors can take advantage of this pattern to enter a trade when the price breaks out of the flag.
Identifying characteristics
Appears after a strong uptrend.
The flag part has a smaller slope compared to the flagpole and should not be completely opposite.
Volume decreases during the flag phase, then increases again when the price breaks out.
Trading strategy with Bull Flag
Entry point
When the price breaks above the resistance of the flag (downtrend channel or accumulation area) with increasing trading volume.
Stop loss point
Place below the support of the flag to reduce risk if the pattern fails.
Price target
Calculate the length of the flagpole and add it to the breakout point to estimate the target price.
Notes when using Bull Flag
Confirm trend
Bull Flag only works well in strongly trending markets.
Trading volume
Pay attention to volume to confirm the validity of the pattern.
Combine tools
Use additional indicators like RSI, MACD, or MA lines to increase accuracy.
Example
Suppose Bitcoin (BTC) is rising from 30,000 to 35,000 USD with high trading volume (flagpole). Then, the price adjusts in the range of 34,000 – 33,000 USD with a narrow range and decreasing volume (flag).
When the price breaks above 35,000 USD with increasing volume, this is a confirmation signal for the Bull Flag pattern.
Conclusion
Bull Flag is a useful tool for crypto investors to take advantage of trends, but it should also be combined with other analyses to ensure trading effectiveness.
Follow me @TinTucBitcoin #tintucbitcoin #Write2Win #btc #binance #binance
