If you see a potential Bull Flag setting up, do you know how to project the Profit Target? Let’s use Friday’s intraday action and the bull flag that set-up mid-day to learn how to find the price projection point of a Measured Move or Bull Flag.
I described earlier how to use the Fibonacci Price Projection tool in TradeStation (which is the same in other programs I’m sure) to Project a “Measured Move” off a Flag and I wanted to show today’s action as an example. Please reference that article for a more detailed description.
To review, there are three parts to a Bull (or bear) Flag:
1. The “Pole“ (which is the initial up-thrust)
2. The “Flag” (which is the retracement against the impulse)
3. The “Measured Move” (which is the portion you want to try to capture for profit)
Use your Fibonacci price projection tool to start with the Low of the Pole, draw (or click) to the High of the Pole, and then draw (or click) to where you suspect the Flag will find support. The software then draws the respective Fibonacci projection for you – in this case, the 100% Price Projection.
Keep in mind that the Flag should find support at a Fibonacci Retracement of the Pole. In this case, the flag found support at the 50.0% retracement (not shown).
Even if you miss profiting from a good piece of the Measured Move, you can identify expected resistance from the Price Projection – the dojis there gave you clues odds favored a return at least to the 20 EMA which was good for a scalp.
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