Bullish Flag Pattern Analyze - Bottom Right Triangle
01
Pattern Overview
The Bottom Right Triangle is identified by YardCharts as a bullish reversal pattern, resembling a right triangle:
- Horizontal Line (Long side): Connects two or more near-equal market highs (Line 1, Image A)
- Vertical Line (Short side): Extends from the horizontal to the lowest market point below it. (Line 2, Image A);
- Hypotenuse: Connects ascending market lows, indicating bounces below the horizontal (Line 3, Image A).
02
Pattern Formation Criteria
- A minimum of two, ideally three, ascending bounces from the left must occur below the horizontal line
- Preferably, the descent from the horizontal to the lows should be slower than the ascent back to the horizontal, affecting the pattern's performance upon breakout.
03
Signal Confirmation
- A buy signal is generated when the price closes above the horizontal line post at least two bounces.
- A stop loss should be set just below the most recent bounce low before the breakout.
- Refer to Image B for a visual representation of the pattern's key characteristics.
04
Historical Performance
Here are 3 instances YardCharts has identified on Nasdaq and NYSE where this pattern led to significant gains post-breakout, without triggering the stop loss, showcasing at least a three-fold increase from the breakout point to the peak.
