Understanding Bull Flag and Bear Flag Patterns in Crypto Trading

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Crypto trading is very lucrative for those that really understand the market, chart patterns, and how to perform both technical and fundamental analysis.

However, will I say trading crypto comes with luck, despite how volatile cryptocurrencies are? Well, due to the volatility nature of cryptocurrencies, it is recommended for anyone, even an expert, not to just rely on research, but on technical analysis, where you will get to understand chart patterns like a bull flag and bear flag chart patterns, which is a good strategy most traders are using to identify market trends.

As a trader, if you can identify a trend earlier before entering the market, you can plan the best way to make your trade execute smoothly without putting you into losses. Before diving into Bull flag and Bear flag patterns, it is good for you to know that these two patterns can be potential indicators for you to either enter long (buy) or short (sell).

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Bull Flag Pattern

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A bull flag pattern is the type of pattern that shows an uptrend at the time when the price trend of the asset that is traded is expected to move upward. I.e., when the price is upward to keep moving upwards. The bull fag is classified into two components, which are the flag and pole, which will be treated separately.

In continuation to the bull flag pattern, it is a pattern that could be a wedge if the trend lines coverage, of which volume usually decreases, shows that traders involved with the previous trend are strong to sell or buy the traded asset during consolidation. Seeing such a move, you should know that there are high chances for the market to continue moving upwards.

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Bear Flag Pattern

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The bear flag pattern is the opposite of bull flags. It is the type of pattern that shows a downtrend at the time the price trend of the asset that is traded is expected to face a downside move. Bear flags are also classified into two components, which are the flag and pole.

In a bear flag, the uptrend movement is known as the flag, whereas the downtrend is the pole. In conclusion to this, whenever you see a significant price decline followed by a consolidation that is forming a flag-like shape with a downtrend sloping, you should know that it is a bear flag that is formed, meaning the chances of the market moving in a downtrend are very high

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The Flag and Pole

The flag is first formed before the pole. However, the pole stands as a significant move that is either lower or higher, notwithstanding whether the market is bearish or bullish. Although an increase in trading volume can create a flag pole, In terms of the bull flag, goes before the flag, whereas the bear flag, forms before the pole.

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Tips for trading the flag and bear patterns

Knowing the tips shared below can help you trade these two patterns very well.

• Tips1: You have to first look for a confirmation before entering a trade.

• Tips2: After seeing a confirmation, set your stop loss and take profit. Your stop loss can be placed above the flag if you are going short (selling). As for taking profits, you can take them at predefined levels, like levels of support or resistance.

• Tips 3 Look out for false breakouts. Ensure you keep your eyes on the price and volume action so you can know when there is a breakout or false signal.

• Tips4: Consider the wider market because, in bull and bear patterns, the bullish and bearish markets are difficult to comprehend.

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Conclusion:

Bull flags and bear flags can be a good way of identifying potential trend reversals in any digital asset, like cryptocurrency. Using these two patterns in your trading will help you minimize your losses and increase your chances of making more profit. Although no trading strategy can give you 100% of what you are looking for due to the volatile nature of cryptocurrencies, however, with the help of this post, we have been able to learn about the bull and Bear Flag pattern, its components, and many others.

This post is completely written by me after conducting my research from the link below, which can help you understand the topic better.

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Disclaimer

_{Note that cryptocurrencies are volatile assets, so everyone should conduct their research very well and make use of the best strategy to enter the crypto market. This post is not investment advice but stands as educational guidelines.}