Flag breakouts are some of the most powerful moves a stock can make. Flag formations are relatively easy to spot, and relatively easy to trade as well. Later on in parts 2 and 3 in the series I will get into some more of the technical aspects of flag trading. This is a key point in determining if a flag is really a flag. Pennants have been very common in recent years.
Flags can form in downtrends as well.
Again, notice the strong volume on the flag pole on October 28 and 29, and then the decreasing volume as the pennant formed through October 6th. It is important to note that MOST flags tend to break out in the direction of the prevailing trend. This is important to note. Similarly, the best flags to short are upside down flags in strong downtrends. If one this is obvious from these charts, its that alot of money can be made if one is savvy enough to identify and trade a flag breakout.