Bullflags often breakout from strong support levels, when they have been slowly dropping while forming the flag. So often shorts are positioning themselves for a break of support -when actually they get trapped at the bottom of a huge bullflag and totally trapped as it breaks out. That BEAS chart I posted was a fine example of a long term bullflag breakout last week. It looked sickly - (UNLESS you saw that flag forming) so shorts who did not see the pattern were all over it. And when it broke out it really took off.
Predictive value, yes since the market acts daily on the morning spin or intraday news, but after spending time in Linda Bradford Raschke's trading room this month, and watching her make some of the most incredible trades based on bullflags, bearflags and wedges, I love 'em!
I've actually had great luck with them on the futures lately too since I started trading them. There was a rising bearish wedge on the nas futures yesterday afternoon that I just saw, it preceded that nasty end of day selloff. So anyone who spotted it forming and went short at the top made 20 pts as the futures tumbled end of day.
The one I remember clearly was the bullflag on the S&P that started forming Dec 5 or so. After watching it on a 240 minute time frame for weeks she - and her traders were all waiting for it to resolve itself, and when it broke out on 12/17, they were all onboard for a 50 pt move at $2500 per contract!
Patterns are a phenomenal trading tool once you learn to spot them...as i always say, any edge helps!
Teresa Lo did a piece for her subscribers today on all the rising wedges on the stock charts of the top traders today.
Very interesting, as these stocks are hitting new highs while forming bearish rising wedges. The end result may be pretty nasty, and knowing they exist and other traders are also watching them, helps a trader protect their capital if in one of these stocks.
PS, GNSS has a beautiful bullflag <g>
You can really see it on the 120 or 240 min chart. If this pattern has any predictive value at all, then GNSS is about to break out to new highs again. Market willing of course : ) |
