Master The Bull And Bear Flag — The Pattern That Prints

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This is the Trading Playbook where the
charts do the talking and every session
makes you a better trader.
What's going everybody? Welcome to the
Trading Playbook. My name is Lawton Ho
here with Verified Investing
and welcome to our show. Thank you guys
so much for tuning in. Before I get any
further, guys, I just ask that you
please like, comment, and subscribe to
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Let me know down below what indicators
you want me to cover next.
And
um thanks so much for being here again,
guys. Before I go anywhere, any guesses
on what we're going to be covering
today?
Well,
today's play is
the
uh the bull and bear flag. Now, what is
that? I can go ahead and hop into my
charts and kind of draw it for you
before getting into some examples.
Right? Um a bull and bear flag, right,
is basically a pattern where you look
for a down move
followed by sideways to upwards
consolidation. Now, if you create a
pattern like this, what are you
expecting? We went over trend lines. We
went over different patterns. Well, we
know when it's up sloping and it breaks,
that is bearish. So, down move then
upward sideways consolidation equals
bearish. So, we'll go ahead and write
this down on the chart for you.
Oh, not definitely not what I want to do
there.
Down
move plus
sideways
So, if a bear flag
is a down move plus upward sideways
consolidation, then what is a bull flag?
Well, we like to say the inverse, right?
So, instead of down move,
we're looking for an up move. And then
instead of an upward to sideways
consolidation, we're looking for
downward to sideways consolidation
there.
So,
using this example, this is a down move
followed by sideways to upward
consolidation.
And inversely, a bull flag would have a
nice move up
and then a downward to sideways
consolidation. All right, it's not going
to always look as clean as this, but if
it did, you can see that a break up
Oops, sorry about that. A break to the
upside
would, right, would
be bullish, right?
And one more thing to note, guys, and
this is very important, you can take a
measured move by using the
length of the flag pole, right? If you
really wanted to, for example, the
length of this flag pole would be
something like this, and you'd expect
after a break lower, maybe it to fall
this much, right? But that's just an
example. Um this is all just me drawing.
Let's hop into the charts
and see if we can
cover a few.
And let's hop into gold because we have
a couple great examples here
of potentially a bull or bear flag. Now,
before I go any further, I want you guys
to help me
by reading the reading the tape.
So, taking a look at this, go ahead and
see if you can identify
any flag patterns.
So, you can pause it here
and try and figure it out.
So,
now that we've done that, I'm going to
show you what we had.
Had a nice down move followed by what?
An upwards to sideways consolidation.
And you have kind of a move like this.
And what I like to use are parallel
channels
just because they help me demonstrate
direction, right? You had a beautiful
move down here on gold
followed by
upwards to sideways consolidation.
Um
and then you get the break and then you
saw the fall. But if we go even closer,
right? You can have an even smaller one
right here. For example,
had a nice down move this day
on gold.
Down move sideways to upwards
consolidation. Now, it doesn't always
have to be in a parallel, but parallel
helps.
Confirm below.
And boom, look at that. Big fall there
on gold.
Now, you can find this on any timeframe.
1 minute, 1 hour, 10 minute, 1 weekly,
um daily, right? Obviously.
Uh so, it's important to note that you
know, the the time period in which
you're finding these patterns are the
time periods in which you're expecting
to uh
to see them play out.
Right? And then I'm going to cover a
chart. So, this is going to be
interesting for you guys, some new
information. So, Alibaba, Chinese
company, right? But we traded here in
the uh United States on the New York
Stock Exchange.
Well, you might look at this and say,
remembering from some of our past
episodes, "Law and there's so many gaps,
there are gap fills everywhere on
Alibaba. That's because it trades
overnight in China and the price will
react to that. So, in order to chart
Alibaba, this is just a freebie, we'll
actually use their
the Chinese um equivalent. So, 9988,
they don't use stock tickers, they use
numbers. This is the same exact chart as
you saw me overlay switch between the
two. This is just the Chinese
um in the Chinese markets.
And here,
right? Let's see if we can see.
Do you see any bull or bear flags here?
Right?
Do you see any
bull or bear flags?
Well,
you could say, "Hey Lawton, look,
you had a nice up move
on Alibaba
followed by, you know, upwards to
sideways consolidation and then you got
a break of that. That's bearish. Now, it
is bearish, but it's not a bull flag.
It's not a bear flag either because
you need an up move to downward sideways
consolidation favoring a move up or a
down move with upward to sideways
consolidation favoring a move down. This
is simply just an up sloping parallel
channel break, which we covered a couple
episodes ago.
But, if we go ahead and change
here, [snorts]
right, to potentially the uh weekly and
this is the most important thing about
different time frames, what do we see
develop over here?
You might not have been looking,
but over here we have an absolutely
beautiful
bear flag. Down move followed to by
upward to sideways consolidation. Let's
find the measured move of that flagpole.
Right, basically something like this,
right? And and flagpole patterns, the
the measured moves don't generally play
out all the way. Right, I'd say that,
you know, 50 25 to 50% of the measured
move is generally what you're looking
for just cuz these moves can get kind of
extended. But look how beautifully that
played out. Coming down and almost
filling like 75% of that measured move.
Right, that is the bear flag. Now, for
this to have a bullish bull flag here,
we would need to see something like
this.
And then this continue
followed by a break to
the upside. So, the question is, well,
where do we get in? Where do we get
negated? Where is uh
Where's the edge? Where is the edge when
trading these?
Well, for me, for example,
couple things.
I would personally say that when you're
trading these flag patterns, you're
always going to be kind of watching the
lowest point, these kind of pivots,
right? The lowest part of the flag
pattern cuz should this support line
break,
that's when you shorted on a bear flag.
Right, although you had this upward
sideways consolidation making kind of
parallel channel, you can trade parallel
channels like you normally would. But if
you're talking specifically for this
type of flag pattern, I'm waiting for a
break of the lowest point of
that kind of flag for a break. And you
see how it sat there, sat there, sat
there, finally broke, closed below, and
boom, absolutely violent move down on
gold 15% lower.
Right, 15% lower.
Alibaba, let's take a look.
Beautiful flag pattern {slash} parallel
channel.
It's trading, trading, trading.
And then look, as soon as this bottom of
this kind of flag, this low pivot broke,
boom, explosive move, 25 percent percent
down.
All right?
Now, in tomorrow's play call, I'm going
to give you three different actionable
trades coming up with active flag
patterns both bullish and bearish for
you to keep on your radar. It's going to
be TRMB Trimble, it's going to be ACN
and ALAB. So, make sure to watch
tomorrow's episode if you want to know
what flag patterns are coming up giving
you an opportunity to trade.
Again, guys, my name is Lawton Ho here
with Verified Investing. Thank you guys
so much for watching uh this video. If
you want to see more content just like
this, please like this video, comment,
subscribe to the Verified Investing
YouTube channel, and thank you guys so
much as always for being part of our
community. Have a great weekend, and
I'll see you all tomorrow. Bye, guys.
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