Cup and Handle Bull Flag
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AXP seems to have formed a bull flag while pulling back. Price was recently outside the bollinger bands set on an 80 moving average, which is a bullish signal, but price is drawn back in to the bollinger bands as a rule. Bull flags are formed in a pull back but I have seen them break to the downside recently. Any pattern can fail.
Price did not close over long entry level for the flag today. Price did reach long entry level barely and closed below long entry level.
Price is over long entry level for the cup and handle pattern. Long entry level can be subjective and is an "at or above" type of level. You do want to enter under immediate resistance, but also enter as close to support as you can.
A bull flag is a technical continuation pattern which can be observed in stocks with strong uptrends. The pattern takes shape when the stock retraces by going sideways (or by slowly declining) after an initial big rise in price.
The top trendline is resistance and the bottom trendline is support. Be aware of a break in the bottom trendline as it can signal a break to the downside. A good place for a stop is under the bottom trendline of the flag.
RUN UP - In the first stage, buyers aggressively step in the market, driving prices higher. These buyers then attract other buyers, creating momentum.
CONSOLIDATION - After a while price settles down. This happens because less and less buyers are willing to purchase shares at this point (potential buyers begin to view the stock as too extended). Sellers also begin to come into the market because they don’t want to give up the made gains. When all of this happens, the stock will go into consolidation. It will remain in this phase until more buyers or sellers enter the market and disrupt once again this equilibrium. Even a bull flag can break to the downside. The hope is that it will signal more buyers (o:
The run-up before a bull flag should be a clear, fast and large move with increased volume.
The flag itself should be orderly. A tight flag is best without a lot of space between the candles. A flag should not go on and on for a long time dipping lower and lower. Keep in mind the size of the flag in relation to it's pole. It can not become so long that the pole can not support it. Volume should stay on the low side while the flag is forming as you do not want to see a lot of selling going on during formation. Increased volume during the pole formation and at break out is a good thing.
Not a recommendation
Other traders see the patterns you see. Fighting the urge to see what we want to see verses what is really there can be an obstacle.
Price did not close over long entry level for the flag today. Price did reach long entry level barely and closed below long entry level.
Price is over long entry level for the cup and handle pattern. Long entry level can be subjective and is an "at or above" type of level. You do want to enter under immediate resistance, but also enter as close to support as you can.
A bull flag is a technical continuation pattern which can be observed in stocks with strong uptrends. The pattern takes shape when the stock retraces by going sideways (or by slowly declining) after an initial big rise in price.
The top trendline is resistance and the bottom trendline is support. Be aware of a break in the bottom trendline as it can signal a break to the downside. A good place for a stop is under the bottom trendline of the flag.
RUN UP - In the first stage, buyers aggressively step in the market, driving prices higher. These buyers then attract other buyers, creating momentum.
CONSOLIDATION - After a while price settles down. This happens because less and less buyers are willing to purchase shares at this point (potential buyers begin to view the stock as too extended). Sellers also begin to come into the market because they don’t want to give up the made gains. When all of this happens, the stock will go into consolidation. It will remain in this phase until more buyers or sellers enter the market and disrupt once again this equilibrium. Even a bull flag can break to the downside. The hope is that it will signal more buyers (o:
The run-up before a bull flag should be a clear, fast and large move with increased volume.
The flag itself should be orderly. A tight flag is best without a lot of space between the candles. A flag should not go on and on for a long time dipping lower and lower. Keep in mind the size of the flag in relation to it's pole. It can not become so long that the pole can not support it. Volume should stay on the low side while the flag is forming as you do not want to see a lot of selling going on during formation. Increased volume during the pole formation and at break out is a good thing.
Not a recommendation
Other traders see the patterns you see. Fighting the urge to see what we want to see verses what is really there can be an obstacle.
Note
Correction: enter above resistance not under resistance (o:
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