What Is A Bull Flag Pattern?
A bull flag, also known as a "bullish flag", is a technical analysis bullish continuation chart pattern that signals a continuation in the price of an existing uptrend. A bull flag leads to a further increase in the price of a market.
A bull flag forms when there is a steep increase in the price of a market, followed by a period of rangebound and consolidation price action.
A bull flag resembles the shape of a "flag".
Bull Flag Components
In order to identify a bull flag chart pattern, there needs to be certain components displayed on the price chart of a market.
The components of a bull flag are:
- A rising flagpole: This is an uptrend line that illustrates the strong bullish direction of the price of the market. It is called the "flagpole" of the bull flag.
- A declining support level: This is a short downtrending support level that connects the swing lows together. It is usually where a trader will place a stop-loss when trading the bull flag pattern.
- A parallel declining resistance level: This is a short downtrend resistance level of the bull flag. It connects the swing highs together and it is usually the area where traders buy the breakout of a bull flag pattern.
Bull Flag Chart Pattern Examples
Below are visual examples of bull flag chart patterns on the price chart in different markets and on various timeframes.
Example Of A Bull Flag Pattern In The Stock Market
In the above price chart of Tesla stock, a bull flag formed. It leads to a rise in the price over the next few weeks.
This is a great example of the bull flag leading to a continuation in the bullish price trend.
Example Of A Bull Flag Pattern In The Commodities Market
In the above price chart of Soybean futures, a bull flag formed. It leads to a steady increase in the price of the market over the next few days and weeks.
Bull flags can form in any market.
Example Of A Bull Flag Pattern On A Shorter Timeframe Price Chart
In the above 1-minute price chart, there is an example of a bull flag that formed.
This bull flag lead to an increase in the price over the next few minutes.
Example Of A Bull Flag Pattern On A Longer Timeframe Price Chart
In the above weekly price chart, there is an example of a bull flag pattern that formed.
The bull flag leads to a multi-week bullish price move in the market and a rapid increase in the price.
Bull Flag Pattern Timeframes
Bull flag chart patterns can form on any timeframe price chart and they are not restricted to any one timeframe.
They can form on the short 1-minute price charts up to the very long weekly and monthly price charts.
On a 1-minute price chart, a bull flag will usually take at least 15 minutes to form.
On a daily price chart, a bull flag will usually take 7 days or more to form.
There is not a set rule on how long it will take a bull flag to form. Instead, a trader will use the visual price chart to gauge when the pattern has formed.
How To Find Bull Flag Patterns
The methods for finding bull flags chart patterns are:
- Use a bull flag chart pattern scanner: A free bull flag scanner can automatically scan financial markets and scan for the bull flag pattern forming.
- Manually look through the price charts: Browse through the price charts of the markets and try to spot and draw bull flags on the charts.
- Scroll through chartered market technicians' Twitter feeds: Follow Chartered Market Technicians on Twitter to see when they publish price charts with bull flags on them.
Beginner traders typically find that browsing through the price charts manually helps them to learn the bull flag pattern faster.
Bull Flag Pattern Benefits
The benefits of the bull flag chart pattern are:
- It helps identify potential bullish price moves: A bull flag can help traders identify further price increases and bullish trends in a market.
- It can be applied to any market: Bull flags can work in any market and are not limited to just one.
- It offers a great reward to risk ratio: A bull flag pattern can offer a great reward to risk ratio.
Bull Flag Pattern Limitations
The limitations of the bull flag chart pattern are:
- New traders tend to draw the bull flag wrong: Traders can sometimes find it difficult to draw the bull flag and find the correct levels to draw.
- Bull flag patterns can fail: A bull flag pattern can fail and a trader should expect this to happen by setting stop-losses to manage risk when the pattern fails.
- The entry point is subjective: The entry points for a bull flag is subjective and can vary from trader to trader. This can cause confusion for new traders. However, full-time traders will typically watch a price range for a breakout of the pattern instead of just one fixed price.
Frequently Asked Questions About Bull Flag Patterns
Below are frequently asked questions about the bull flag chart pattern.
Are Bull Flag Chart Patterns Bearish?
No, a bull flag chart pattern is not bearish. It is a bullish pattern that signals further bullish price trends and a further increase in the price of the market.
Can Moving Averages Be Used With A Bull Flag?
Moving averages can be used with bull flags without any issues. A trader will usually use the moving average to trail a winning trade from a bull flag breakout.
Are Bull Flags Accurate?
Bull flags have been examined by many traders for their accuracy. According to the book, Encyclopedia of Chart Patterns by Thomas Bulkowski, he found that bull flags had a 64% win rate of reaching their price targets (1).
At Bapital, we did our own study of 21,665 bull flags and found that 59% of them were successful in achieving their price target. This is a lower win rate than Bulkowski results.