BEARISH FLAG PATTERN � Part 2: Important Characteristics

Go back to Part 1: Bearish Flag Formation.Important Characteristics of Bearish Flag PatternShape of Bearish Flag:1) Flagpole:For Bearish Flag pattern to be more reliable, there should be a very sharp / steep price decrease (almost vertical, and may contain gaps) on heavy volume that makes the �Flagpole� part of the pattern.Without a steep price decrease, the pattern might be less reliable and riskier.2) Flag:A Flag part of the pattern is formed when the price movement is contained within two parallel lines, representing a brief consolidation after the sharp decline.This consolidation forms a small rectangle that frequently slopes against the preceding trend (i.e. the trend of the Flagpole part).Therefore, in case of Bearish Flag, since the preceding trend is down, the rectangle flag often...

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BEARISH FLAG PATTERN � Part 1: Formation

Bearish Flag is a short term bearish continuation pattern that occurs during a downtrend, indicating a pause / small consolidation before continuing its downward moves.This pattern normally appears following a sharp price decrease on high volume.The Formation of Bearish FlagBearish Flag Pattern is usually preceded by a very steep (almost vertical) decrease in price on heavy volume. This steep price decrease makes the �Flagpole� of the pattern.The sharp decline in price may occur due to negative market sentiments toward unfavorable events / developments, such as negative earning surprises, downward guidance, fraud / court cases, etc.After the...

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Chart Patterns

Since we�ve discussed some of the common chart patterns, as usual, to be more organized, I�d like to put the links of all posts on this topic below, and place the link to this post on the top left corner for easier future reference.Click the following links to read each of the posts:1) Technical Analysis � Definition & Assumptions2) Chart Patterns � IntroductionCONTINUATION PATTERNS:3) ASCENDING TRIANGLE PATTERN* Part 1: Ascending Triangle Formation* Part 2: Ascending Triangle Important Characteristics 4) DESCENDING TRIANGLE PATTERN* Part 1: Descending Triangle Formation* Part 2: Descending Triangle Important Characteristics5) SYMMETRICAL TRIANGLE* Part 1: Symmetrical Triangle Formation* Part 2: Symmetrical Triangle Important Characteristics6) BULLISH FLAG PATTERN* Part 1: Bullish Flag...

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BULLISH FLAG PATTERN � Part 2: Important Characteristics

Go back to Part 1: Bullish Flag Formation.Important Characteristics of Bullish Flag PatternShape of Bullish Flag:1) Flagpole:For Bullish Flag pattern to be more reliable, there should be a very sharp / steep price increase (almost vertical, and may contain gaps) on heavy volume that makes the �Flagpole� part of the pattern.Without a steep price increase, the pattern might be less reliable and riskier.2) Flag:A Flag part of the pattern is formed when the price movement is contained within two parallel lines, representing a brief consolidation after the sharp increase.This consolidation forms a small rectangle that frequently slopes against the preceding trend (i.e. the trend of the Flagpole part).Therefore, in case of Bullish Flag, since the preceding trend is up, the rectangle flag often slightly...

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Reading Links

Daily Options Report: Implied V. HistoricalOne Option: How Do I Know If I Get A Good Deal On An Options Purchase?Options Guy: Long Calendar Spreads - Part 1.Options Trading The Smart Way: Calendar Spreads Ideas on DISHAfraid To Trade: Most Perfect Downtrend ExampleStock Bandit: Consider Risk First, Then RewardA Trade A Day: Merge Time Frames to Make More Mo...

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BULLISH FLAG PATTERN � Part 1: Formation

Bullish Flag is a short term bullish continuation pattern that occurs during an uptrend, indicating a pause / small consolidation before continuing the uptrend.This pattern normally appears following a sharp price increase on high volume.The Formation of Bullish FlagBullish Flag Pattern is usually preceded by a very steep (almost vertical) increase in price on heavy volume. This steep price increase makes the �Flagpole� of the pattern.The sharp rise in price may occur due to positive market sentiments toward favorable events / developments, such as positive earnings surprises, new product launch, etc.After the sharp increase, the price movement...

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SYMMETRICAL TRIANGLE PATTERN � Part 2: Important Characteristics

Go back to Part 1: Symmetrical Triangle Formation.Important Characteristics of Symmetrical Triangle PatternExisting Trend:There should be an established existing trend (either uptrend or downtrend) in order for the pattern to qualify as a continuation pattern.Shape of Symmetrical Triangle:* There should be at least 4 reversal points to draw two converging lines, i.e. two successively lower peak (high) points forming a downward sloping upper line and two successively higher trough (low) points forming an upward sloping lower line, which converge if both line were extended right.* There should be some distance between the two peaks as well as the two troughsIn other words, prices should increase and hit the descending upper line then decline for at least twice (forming at least two peaks). Prices...

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