HONEYWELL (BIG RALLY)
PERFECT Consolidation - done
textbook chart pattern rare to find - done
Breakout + breakout - smooth
just hold and ride the trade
What Is the Flag and Pole Pattern?
Imagine a flag on a pole—that’s the mental image we’re going for.
Pole: First, there’s a sharp price move (either up or down). This rapid movement creates the “pole” part of the pattern.
Flag: After the pole, the price enters a consolidation phase. It’s like the market catching its breath. During this period, the price moves within a narrower range.
The flag can take different shapes:
Sometimes it’s a horizontal rectangle (like a flag hanging straight down from the pole).
Other times, it’s angled away from the prevailing trend (like a flag fluttering in the wind).
Psychology Behind the Pattern:
Despite the strong vertical rally (the pole), the stock or asset refuses to drop significantly during the flag phase.
Bulls are like eager shoppers—they buy every dip, unwilling to wait for better prices.
The breakout from a flag often results in a powerful move in the same direction as the pole. Traders measure the length of the prior flagpole to estimate the potential target.
Variants:
There’s also a cousin called the bullish pennant, where the consolidation takes the form of a symmetrical triangle.
Remember, these patterns work similarly in reverse:
Bear flags (bearish version) and pennants signal potential downtrends.
Examples of Bullish Flags:
Let’s look at a couple of visual examples:
Bullish Flag Emergence: Consider Answers Corp. The tight consolidation after a strong rise forms a bullish flag. Bulls are buying aggressively. The target? Around $9.50.
Rectangular Bull Flag: America Service Group Inc. shows a rectangular bull flag. Notice the long lower tails on the candles—clear signs of buying. Volume patterns matter too!
textbook chart pattern rare to find - done
Breakout + breakout - smooth
just hold and ride the trade
What Is the Flag and Pole Pattern?
Imagine a flag on a pole—that’s the mental image we’re going for.
Pole: First, there’s a sharp price move (either up or down). This rapid movement creates the “pole” part of the pattern.
Flag: After the pole, the price enters a consolidation phase. It’s like the market catching its breath. During this period, the price moves within a narrower range.
The flag can take different shapes:
Sometimes it’s a horizontal rectangle (like a flag hanging straight down from the pole).
Other times, it’s angled away from the prevailing trend (like a flag fluttering in the wind).
Psychology Behind the Pattern:
Despite the strong vertical rally (the pole), the stock or asset refuses to drop significantly during the flag phase.
Bulls are like eager shoppers—they buy every dip, unwilling to wait for better prices.
The breakout from a flag often results in a powerful move in the same direction as the pole. Traders measure the length of the prior flagpole to estimate the potential target.
Variants:
There’s also a cousin called the bullish pennant, where the consolidation takes the form of a symmetrical triangle.
Remember, these patterns work similarly in reverse:
Bear flags (bearish version) and pennants signal potential downtrends.
Examples of Bullish Flags:
Let’s look at a couple of visual examples:
Bullish Flag Emergence: Consider Answers Corp. The tight consolidation after a strong rise forms a bullish flag. Bulls are buying aggressively. The target? Around $9.50.
Rectangular Bull Flag: America Service Group Inc. shows a rectangular bull flag. Notice the long lower tails on the candles—clear signs of buying. Volume patterns matter too!
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