One thing i hate about all the chart patterns is placing a stop-loss at the pattern lows. That spoils a RR Ratio.
Bullish Flags are continuation patterns it assumes that the prevailing trend will continue after the breakout.
So why keeping stop-loss at the pattern low?
If the trend is strong then breakout will be as strong as a trend too.
I don't applying a re-test theory in my trading with short term patterns.
This are my views about trading short-term patterns. Critics are welcome to discuss.
We are trading probabilities, we can't predict future prices, but we can trade what is probable as per our learning and experience.
CMP 530 SPOT & writing 30JAN 560 CE at 7.60
However, my gains are restricted to 15% or 77 Rs due to a covered call. But Still it decent gain.
In the case of century textiles, it's a bullish flag followed by a good impulsive move, so I'm assuming that breakout is a true one and it will start moving in its prevailing trend direction without falling back or rising again.
In a few chart patterns for example flags, wedges, ascending-descending triangles when they are as a continuation pattern, the gap between entry point and recent swing low is too wider. So I chose to keep stop-loss a few% below the breakout candle. Because keeping at pattern low, spoils RR ratio mostly. And while trading continuation chart patterns, I am compromising accuracy over risk-reward ratio.