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2017issue C0720-21

Constructing delayed buy-stops on bull flags and pennants

A bull-flag or pennant is built from a flagpole, an unfinished pause, and a delayed-breakout. The long hypothesis becomes live only when a buy-stop sits above the next session high, with a trailing-stop already sized.

  • A bull-flag is a congestion band, often with a slight downward tilt, sitting on a sharp upward flagpole; a pennant is the same sequence with price contracting into a triangle.
  • A preferred first filter is range-expansion: the flagpole should be at least as tall as the prior day's range before the pause is treated as a candidate.
  • Confirmation is delayed until the session after the pause is first spotted, then a buy-stop is parked $0.50 above that session's high, not inside the pause.
  • Open risk is bounded with a $2 initial stop that is also used as a trailing-stop, and the swing is described as typically lasting five to 15 days.
Entries in this reading3 entries
Current trackFlag and pennant31 readingsTrailing stop87 readingsBreakout confirmation172 readings

Construction rather than a visual guess

In editorial terms, a bull-flag or pennant is treated here as a construction sequence rather than a shape guessed from the chart. The historical workflow first requires a flagpole, then leaves the pause unfinished until the next session, and only then converts the drawing into a falsifiable long hypothesis.

A bull-flag is constructed as a congestion band, often with a slight downward tilt, sitting on a sharp upward flagpole. A pennant is the same sequence with price contracting into a triangle. Either structure is sufficient. The flagpole is the sharp upward impulse that must appear before any bull-flag or pennant consolidation is treated as a candidate structure.

Require range-expansion on the flagpole

A preferred filter is range-expansion: a flagpole at least as tall as the prior day's range. The stated rationale is that range-expansion draws additional participation to a later breakout.

The long hypothesis may follow a first impulse that has already printed. That impulse is still required before the pause is read as a bull-flag or pennant.

Leave the pause unfinished until the next session

The long hypothesis is placed above the high of the completed flag or pennant, not inside the pause. Confirmation is delayed until the session after the pause is first spotted.

A buy-stop is then parked $0.50 above that session's high so entry occurs only if price clears resistance.

TTWO 15-minute path through the flagpole, bull flag, and pennant

Take-Two Interactive (TTWO) on a 15-minute chart from late March through 19 April 2017. Price first prints a sharp flagpole near 57.60–58.20, consolidates in a mildly downward bull flag around 58.30–58.80, then thrusts into a pennant near 60.20–60.50. The series is read from the plotted candles, not from a table; a trader should treat the path as the construction sequence the column describes, not as exact prints.
Take-Two Interactive (TTWO) on a 15-minute chart from late March through 19 April 2017. Price first prints a sharp flagpole near 57.60–58.20, consolidates in a mildly downward bull flag around 58.30–58.80, then thrusts into a pennant near 60.20–60.50. The series is read from the plotted candles, not from a table; a trader should treat the path as the construction sequence the column describes, not as exact prints.TTWO · 15-minute candlesticks · 2017-03-30T00:00:00.000Z to 2017-04-19T00:00:00.000Z

Digitized from the Figure 1 candlestick raster. No OHLC table is printed. Y-values are approximate to about 0.05–0.10 dollars. The $0.50 buy-stop and $2 trailing-stop are stated in the text and are not plotted. Volume histogram at the bottom was not recovered.

Bound open risk with a trailing-stop

Open risk is bounded with a $2 initial stop that is also used as a trailing-stop. That same dollar stop both defines initial risk and is then moved to keep remaining exposure bounded while the swing is open.

The swing is described as typically lasting five to 15 days.

The construction screen

The construction screen uses a 15-day window of 15-minute candlesticks and share prices from $20 to $70. Either a flag or a pennant is sufficient.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
23 of 26 in the Flag and pennant track
201846-47 pp.Next on Flag and pennantCopy an ABC swing as a ruler, then test flags and Fibonacci degreeAfter an ABC zigzag, wave C is re-labeled as a higher-degree wave (A), and an ABC correction (B) is the next counted structure.
All readings on this track · 26 readings
  1. 1986Constructing bounded relative-strength overlays from oscillator limits
  2. 1989Point-and-figure fulcrum, count, and flag as three jobs
  3. 1996The high, tight flag as a three-checkpoint continuation exam
  4. 2000Test chart patterns with confirmation, not names
  5. 2001Failed chart patterns as reverse breakout signals
  6. 2002Ascending triangle and flag: a three-checkpoint QQQ case study
  7. 2002Two-stage chart reading after breakouts
  8. 2002The second pattern after a breakout
  9. 2003Building flags, pennants, and triangles as continuation pauses
  10. 2003When trendline channels age into a wedge or a break
  11. 2004Bearish chart patterns need confirmation before the turn
  12. 2004Constructing flags, pennants, and triangles from swing pivots
  13. 2005Constructing flag and pennant rules from pole to exit
  14. 2005Fanline construction for testing trend health
  15. 2005When flag-and-pennant breakout scans fail a measurement audit
  16. 2006Testing a bear-flag target after the pause is confirmed
  17. 2007Homebuilder rebound as a bear-flag, trendline, and volume case study
  18. 2008Completed chart patterns as reward-to-risk arithmetic
  19. 2012Reading this file
  20. 2012Reading regime change: when to stop trading
  21. 2014Intraday flag construction with breakout and stop rules
  22. 2015Lock lookback and chart scale before you mark a flag or pennant
  23. 2017Constructing delayed buy-stops on bull flags and pennants
  24. 2018Copy an ABC swing as a ruler, then test flags and Fibonacci degree
  25. 2019Failed flags, pennants, and triangles as a completed experiment
  26. 2020Confirming candlestick and flag signals on a weekly chart
By fieldChart patterns222 readingsBy year2017100 readings
All 31 readings tagged Flag and pennant
Also on Flag and pennant5 readings
1996The high, tight flag as a three-checkpoint continuation exam2001Failed chart patterns as reverse breakout signals2002Ascending triangle and flag: a three-checkpoint QQQ case study2002Two-stage chart reading after breakouts2005Commodity group bases, breakouts and pennants