Understanding how to spot patterns on a candlestick chart can be one of the most effective ways to explore investments for beginners. If you’re wondering how to invest in stocks & cryptocurrencies, recognizing a bull flag is an excellent place to start.

What Is a Chart Pattern?

A chart pattern is a formation on a candlestick chart that helps traders predict future movements based on historical behavior. These patterns serve as signals for buy points, sell points, or potential reversals in the market.

Bullish Flag Patterns

Bullish flags indicate upward momentum, often appearing after a short consolidation period. Common bullish flag patterns include:

• Bottom Right Triangle
• Bottom End Sweep
• Bottom Reversal
• Horizontal Support

These formations are key indicators for traders looking to buy low and sell high.

 

Here is a practical example: Bottom Right Triangle, one of the most reliable bullish reversal patterns.

The Bottom Right Triangle is identified as a bullish reversal pattern, resembling a right triangle:

• Line 1 (Horizontal Line): Connects two or more near-equal highs.
• Line 2 (Vertical Line): Drops from the horizontal to the lowest market point.
• Line 3 (Hypotenuse): Connects rising lows, forming a right triangle pointing upward.

 

Pattern Formation Criteria

• Minimum of two (ideally three) ascending bounces from below the horizontal line.
• The descent to the low should be slower than the bounce back up, increasing breakout reliability.

 

Technical Trade Hint

• Image B for a visual presentation of buy at & stop loss hint.
• A buy point is confirmed when the price closes above the horizontal line after at least two bounces.
• A stop loss should be placed just below the last bounce low to limit potential loss in case of pattern failure.

Bearish Flag Patterns

While bull flags prepare you to ride an upward wave, bearish flags help identify potential downward trends. Common patterns include:

• Horizontal Resistance
• Top Right Triangle
• Top End Sweep
• Top Reversal

These formations are key indicators to sell at a higher price and aim to buy back at a lower price. Usually, it is more difficult than the former one. If you are interested, more detailed theory could be found at 👉 Bearish Patterns.

How to Start Investing with Patterns

Want to know how to start investing effectively? It begins with learning candle patterns and practicing candlestick chart analysis. But if manual analysis feels overwhelming, Yard Charts can free you from countless charts, providing precise patterns identification of 13,000+ stocks and cryptocurrencies, with buy & sell suggestions, and sets stop loss hints to manage your risk — ideal for beginners and pros alike. Start your free trial here: https://www.yardcharts.com/trading/free-trial