Bull and Bear Flag Examples

Jan 11, 2008: 8:06 PM CST

Although the next chart may seem garbled, it is actually detailing recent simple bull and bear retracement patterns on the 15-minute chart. This serves as a great educational example:

I also call bull and bear flags “lightning bolts,” though technically I should only call bear flags lightning bolt patterns because of the equivalent downwards thrusts.

Recap: Bull and Bear Flags call for a “measured move” which sets up a key trade based on the price action alone. They are some of my favorite patterns in technical analysis due to their simplicity, ease of stop placement, and exact target location.

Notice the first bear flag which is a sharp retracement against the momentum/price downthrust.

An ascending triangle (which has slightly better odds of resolving/breaking out to the upside) formed which indeed did get a price/momentum up-thrust, which was corrected by a near perfect bull flag (around 2:00 Jan 10).

Price then impulsed down with today’s opening gap and then continued to trend lower all day. A nice and near perfect bear flag formed into the close.

Here’s an isolated example of today’s 5-minute chart:

This example was a more 45 degree angle flag, but the measured move and ejection (breakout) from the retracement (especially from resistance at the declining 50 period moving average) was near ideal.

Once you begin to understand these patterns, they literally leap off the chart at you and call your attention to them when they’re forming.

Besides that, I think they’re fun!

7 Comments

7 Responses to “Bull and Bear Flag Examples”

  1. chris Says:

    nice blog…. keep it up. i really like reading and learning about technical trading.

    i bought DUG the ohter day check it out. what do you think ?

  2. chris Says:

    have you ever done any work tracking the 89 line ? I use it to determine if a stock is bullish or bearish and i use it on most time frames.

    http://stockcharts.com/h-sc/ui?s=$COMPQ&p=W&yr=10&mn=0&dy=0&id=p98116245286&a=103677516

  3. Corey Rosenbloom Says:

    Chris,

    Thank you for the comment and for reading.

    DUG may be good for an investment, but from a technical analysis standpoint, it is in a key downtrend and – though it may be forming a bottom – most technicians would state that it would be best to buy when the stock gave a clear ‘turnaround’ or reversal signal. For example, making a higher high or climbing and supporting above the 20 or 50 period MA. At the moment, it’s sandwiched between the two.

    I also tend to shy away from UltraShort funds unless I take a 1/2 position size so I can spare more capital elsewhere, though it’s extremely rare that I would do so. If we go into recession, then oil prices should be expected to decline, though there are never any guarantees.

  4. Corey Rosenbloom Says:

    Also, I’m unfamiliar with the 89 line.

    Could you provide an explanation? The chart you linked is a great chart.

    Thank you.

  5. Lewis Seals Says:

    Clearly the 89 setup may be the best setup in the markets.
    http://mql.dev.numania.com/iarchive/2009/05/26/

    It is actually call the tunnel method and it uses fib numbers as moving averages. You enter at the 89 ema and take profits at the 144 and 233 ema. You can also use it for going long and short. I think it works because the 89ema usually is around an area of fib confluence. When it hits it takes off like a rocket.

    I am currently studying this method now…

  6. KingLew Says:

    Clearly the 89 setup may be the best setup in the markets.
    http://mql.dev.numania.com/iarchive/2009/05/26/

    It is actually call the tunnel method and it uses fib numbers as moving averages. You enter at the 89 ema and take profits at the 144 and 233 ema. You can also use it for going long and short. I think it works because the 89ema usually is around an area of fib confluence. When it hits it takes off like a rocket.

    I am currently studying this method now…

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