Flags and Pennants

[CanOz]

Hmmm, doesn't look like a convincing pattern there.

I'll run more scans later, and try and post a couple.

CanOz

 

[MS+Tradesim]

EXS. Not much liquidity. Might suit a smaller position size.

 

[beamstas]

 

[Wysiwyg]

Looks like MCG is about to blow.

 

[bowman]

Bowman, nice posts, particularly the second one, noting we may find support at the previous resistance. A good place to buy if we are in an uptrend previously.

Along with double tops and bottoms, flags are my favourite 'traditional technical pattern'.

Cheers MRC. Just looked back and found your post and here is the current CXY chart. For me, support and resistance is probably the most important notion in TA.

I know it doesn't mean anything statistically but I had a look back over the charts posted so far and we have had :

2 breaks to the downside
4 breaks to the upside
5 patterns still intact

I haven't included patterns that had already broken when they were posted.

 

[jrobbo]

Looks like MCG is about to blow.

I posted the MCG flag on the first page, see skg's reply as to why it won't go any further.

Cheers

 

[Wysiwyg]

I posted the MCG flag on the first page, see skg's reply as to why it won't go any further.

Cheers

Okay, re-read, thanks.

 

[MRC & Co]

Yeh, nice re-post of the chart Bowman, demonstrates the point perfectly. Most wouldn't watch for that, they would just be looking at the 'traditional pattern'.

Support/resistance and trends are it for me.

Cheers

 

[bowman]

Three from the mining sector.

 

[bowman]

It's not what you'd call a tight pattern but INL might be worth watching for a move to the upside.

 

[sammy84]

View attachment 29514

Bought BTA today on the basis of a pennant. Took a conservative entry however by buying at the break of the high set a few days back. Did this because 1) Unsure about overall Market direction 2) Slight bearish divergence present and 3) There is some overhead resistance nearby at the 80c mark.

The high close looks promising for tomorrow, so hopefully it gives the trade some room and it becomes 'free'.

Turned out to be a very good trade It goes to show the beauty of free trades.

 

[nomore4s]

One worth watching - only problem is low volume could get alot of slippage on entry & exit. Also some resistance @ $1.70ish

Nice triangle at top of strong trend.

 

[sammy84]

Pennant long way up the flag pole here. Some minor resistance over head but nothing to worrying. The only thing I dont like are the high volumes since the continuation has been forming. What do others make of the volume?

Sammy

 

[bowman]

The volume seems to be decreasing as the pattern plays out, which is what usually happens - similar to triangles. Don't see a problem there.

However I do feel the broader market is poised for a correction and that may be reflected in the way these patterns are breaking right now.

A few of the recent flags and pennants I have posted have either broken to the downside or had weak one or two day breaks to the upside.

I'm taking quick profits and moving on to the next trade, rather than trying for bigger gains.

INL was a nice trade for me but I got out today near the top of the break.

Ditto for ABY, although I might be back there tomorrow (it hasn't really broken up yet) if the US holds up tonight.

 

[sammy84]

Hi Bowman

I guess what throws me off is still the few days that the volume has been above average within its formation, but on closer look I do agree volume is falling.

I'm taking very conservative entries as of current on these patterns(until this market decides its direction) and with the aim of purely achieving 'free' trades, anything from there is a bonus. Stops are also tightened.

Bowman do you find taking quick profits ruins the expectancy however, considering these patterns have about a 40% success rate?

 

[bowman]

Hi Bowman

Bowman do you find taking quick profits ruins the expectancy however, considering these patterns have about a 40% success rate?

Hi sammy

I'm not really sure how to answer that. Most of my recent trading has been either daytrades or 2-3 day trades at most, so for the time being I just approach flags and pennants the same way.

I'm trading these patterns in a way that I feel comfortable with, given my perception of the broader market.

In terms of success rates, I'm not too bothered with that either. For example SDL failed as a pennant pattern but there was a good daytrade there today (which I missed cos I was busy elsewhere) so what I'm saying is I look for quick trades in failed patterns as well.

 

[saiter]

Hey Bowman,

Are you using a scanner to pick out the penants and flags? if so, which one?

Thanks.

Here's my contribution:

 

[bowman]

Hi saiter

My charting program doesn't recognize patterns so I can't scan for them.

Mostly what I do is sort through a daily list of the Top 100 movers and look for stocks which are making a 'flagpole'.

I put these in a watchlist and then watch for the patterns to develop.

 

[gsc]

Hi

Watching WPL for a break down from a flag pattern...any thoughts ?

regards G

 

[bowman]

Hi

Watching WPL for a break down from a flag pattern...any thoughts ?

regards G

Maybe starting to look like a falling wedge pattern. Either way I would agree that it is more likely a bearish pattern. Watch for a break down of that $36 area support/resistance.

Yesterdays short sales were 30% of the daily turnover, whereas the previous four days were 17%, 16%, 15.5%, & 17%.