As of 04/19/2024
Indus: 37,986 +211.02 +0.6%
Trans: 15,084 +136.79 +0.9%
Utils: 876 +15.31 +1.8%
Nasdaq: 15,282 -319.49 -2.0%
S&P 500: 4,967 -43.89 -0.9%
|
YTD
+0.8%
-5.1%
-0.7%
+1.8%
+4.1%
|
 39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 |
As of 04/19/2024
Indus: 37,986 +211.02 +0.6%
Trans: 15,084 +136.79 +0.9%
Utils: 876 +15.31 +1.8%
Nasdaq: 15,282 -319.49 -2.0%
S&P 500: 4,967 -43.89 -0.9%
|
YTD
+0.8%
-5.1%
-0.7%
+1.8%
+4.1%
| |
|
39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 | ||
Statistics updated on 8/26/2020.
For more information on this pattern, read
Encyclopedia of Chart Patterns Second Edition
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High and Tight Flag
|
* Uses a half-height target.
The above numbers are based on 1,028 of perfect trades. See the glossary for definitions.
| Characteristic | Discussion |
| Price trend | Upward leading to the flag. Price must rise at least 90% (shoot for a double) in 2 months or less. |
| Shape | A consolidation pattern forms after price doubles. It usually doesn't look like a flag or pennant, just a pause in the price rise. |
| Volume | Recedes for best performance |
| Confirmation | The pattern confirms as valid when price closes above the highest peak in the pattern, which is usually the flagpole top. |
| Trading Tactic | Explanation | 
The Measure Rule
Tight v. Loose
|
| Measure rule | Compute the height from the start of the price swing (point A in the measure rule figure to the right) to the end of the price swing (B) and then take half of it. Add it to the bottom of the flag (C) to get the target (D). | |
| Breakout | Only buy when price closes above the highest peak in the chart pattern (including the flagpole). That is point B in the Measure Rule figure to the right. Buying sooner risks price never confirming the pattern (in other words, price drops or moves horizontally for months). I know this is different than what I wrote in my book. New research says high and tight flags fail too often when using a flag trendline break. Instead, place a buy stop above the highest high in the chart pattern. | |
| Tight patterns | Trade tight flags, not loose ones. Tight flags perform better than loose ones. A loose flag is one in which price meanders, pokes outside the trendline boundary, contains white space, or looks jagged. See the figure to the right. | |
| Slope | Price trends of 45 degrees or so in the flagpole mean a better post breakout rise than ones that go nearly vertical leading to the flag. | |
| Trendline | Flags with a down-sloping top trendline tend to outperform. | |
| Trendline Trade | For steep price trends, use a volatility stop and draw a trendline beneath price. If price closes below the trendline, then consider selling. For an example, look at IIIN from January to April 2006. The high and tight flag starts in January and price more than doubles in less than 2 months, eventually rounding over at the top. |
The above figure shows an example of a high and tight flag chart pattern. Price begins the rise in October at 9.36 and rises to 17.80, a climb of 90% in less than 2 months. Then price moves sideways, forming an ascending triangle. When the breakout occurs, it confirms the high and tight flag chart pattern as a valid one and price resumes the up trend. Price tops out at 23.72 less than 2 months later, a rise of 33%.
-- Thomas Bulkowski
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