Free Never Published Stock Chart Pattern Secrets - Rising Flag Pattern - stock trading Chart Pattern Education- Chart Pattern Recognition

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Best Kept Secrets of Never Before Published Chart Patterns

Free Lesson

Author - Michael T.P. Wang at http://www.1stock.info - June, 2004

Introduction of Best Kept Secrets

Chart Pattern Secrets - Falling Flag

Chart Pattern Secrets - Rising Flag

Chart Pattern Secrets - Rising Flag

Secret #3 - Rising Flag Patterns: Rising Flag is a chart pattern name I've created. The stock price rises first (Flagpole) and then forms a upward channel (Flag). This pattern can lead to a price break out in either upward or downward direction.

Note: The Rising Flag Pattern strategy has a very high failure rate. The estimated target price usually is not reached. A successful pattern that reaches target price usually happens at the last breath of an upward trend- not at the beginning or half way up. The only time you should short sell a stock with this pattern is if the stock already has a big upward run after an all time high, reaches resistance, or finishes an upward trend target.

To define a Rising Flag pattern, draw a green channel line based on two or more reversal points (V or Λ) on either side of the upward channel.
Copy and paste the green channel line to define the parallel channel. It's o.k. if there aren't two or more reversal points touching the green channel line on the other side of the channel.

Measuring Target Distance:

Draw the pink Measured Line 1. of the initial price movement (Flagpole) from the flat bottom of solid candlestick bar at a. to the flat top of solid candlestick bar at b. Ignore the thin tip line of the candlestick bars. I suggest using a shorter distance for conservative target price measurement.
Note: b. and c. are reversal points that are located between the two channel lines that in some cases may also touch the channel lines.
Copy the Measured Line and pasted as a Measured Target Line 1. from the top of the channel at where the stock breaks out B. to find target price g.
Draw the horizontal blue Target Line at g. level.
It is better to exit a few cents before the stock reaches the estimated target price.

Secret #2 - Fibonacci Retracement in Falling Flag Pattern

Trading Choice #1:

E1. is the Suggested Smart Entry Point. It is $0.01 below the 38.2% Fibonacci Retracement (blue line) of the height of the upward channel.
The height of the channel should be calculated from the moment when the stock first pulls back into the channel and not from the break out moment. Depending on the slope of the channel and the gap between the stock breaking out and pulling back into the channel, the price difference could be significant.
After the stock price breaks out of the channel at B., wait for the stock to pull back to the ideal E1. Smart Entry Price before entering a short sell position.
The stop loss price is $0.01 above the 50% of the Fibonacci Retracement (orange line).

Sample #1 - MERQ

Trading Choice #2:

E2. is the Secondary Entry Point as $0.01 below the e. reversal point.

If a stock does not move to ideal E1. Smart Entry Price and is breaking out the e. resistance level then enter a short sell position at E2.
The stop loss price is $0.01 above the 50% of the Fibonacci Retracement.

Sample #2 - AMZN

Note: This pattern for long strategy has a very low frequency of occurring. It also has a very high rate of failure, especially in day trading. Therefore, to avoid stop losses- E2. entry is better than E1. entry. A successful pattern usually happens at the beginning of an upward trend and not half way or at the last breath of an upward trend. Only long a stock with this pattern if the stock price has just come out of a big downward trend.

Measuring Target Distance:

Copy the Measured Line 1. of the initial price movement (Flagpole) and pasted as a Measured Target Line 1. from the bottom of the channel at where the stock breaks out B. to find target price g.
Draw the horizontal blue Target Line at g. level.
It is better to exit a few cents before the stock reaches the estimated target price.

Trading Choice #1:

E1. is the Suggested Smart Entry Point. It is $0.01 above the 38.2% Fibonacci Retracement (blue line) of the height of the upward channel.
After the stock price breaks out the channel at B., wait for the stock to pull back to the ideal E1. Smart Entry Price before entering a long position.
The stop loss price is $0.01 below the 50% of the Fibonacci Retracement (orange line).

Trading Choice #2:

E2. is the Secondary Entry Point as $0.01 above the e. reversal point.

Enter a long position at E2. if a stock does not move to ideal E1. Smart Entry Price and is breaking out of the e. support level.
The stop loss price is $0.01 below the 50% of the Fibonacci Retracement

Sample #3 - GENZ

Below are more Rising Flag samples

If you like this free lesson, please post your testimonials at the Chart Pattern Forum Testimonials Page.

Two more lessons are for sale: Best Kept Secrets of Powerful Reversal Patterns:

>> W-Bottom and M-Top Patterns Lesson

Secrets of Double Bottoms, Double Tops, One Step Up, One Step Down, Cup and Handle, and Inverted Cup and Handle patterns.

>> Head and Shoulder and Inverted Head and Shoulder Patterns Lesson

Revealing the Best Kept Secrets of powerful top and bottom reversal patterns that every trader must know.

To learn more Stock Chart Pattern secrets, Order those Best Kept Secrets of Never Before Published Chart Patterns Now!

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Each lesson includes animated pattern explanation, detailed text explanation, and real stock examples, like the format shown in the above free lesson of Falling Flag and Rising Flag Patterns. Each lesson will reveal essential secrets that can help you to find a smart entry price, a precise stop loss price, and an accurate price target in the chart pattern. You will know when to enter and exit a position before it is too late.

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