7 characteristics of a PERFECT flag breakout

Number 6 is underratted

What makes a Flag perfect?

A high probability?

There are 7 things to look out for:

1. A True Pole:

   Most of the candles that make up the pole must have consecutive higher highs and higher lows (or at least one of higher highs or higher lows).

2. Massive volumes on the True Pole:

3. Orderly pullback:

   Small range candles. Less volatility. The candles should get smaller and less volatile with each pullback candle.

4. Shallow Pullback:

   How shallow? Anything less than 20% of the pole length is good. Less than 10% of the pole is peak.

5. Low and decreasing volumes on Pullback:

   Volumes should be relatively lower than the pole volumes and decrease with each pullback candle.

6. Long base/Mast:

   The base length (the number of candles in the flag mast) should be at least 1/5 of the number of candles in the pole. In general, anything longer than 20 bars/candles is good. Finally,

7. High Relative Volume on the Breakout:

   Volume on the breakout day should be relatively higher than the volumes in the flag mast.

Thats it.

Let’s see if all the 7 characteristics are present on this flag below:

WABAG

Some more examples:

Veranda:

Posted about this yesterday on Twitter:

Astra Micro: also posted on twitter

I have many more examples to share. But I hope this is enough to drive home the point.

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That’s all for today.

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By the way, I don’t know if I already told you this. But we are right in the middle of an epic exercise where we trade HTFs in the most creative way possible. And I will be doing it again soon.

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This Saturday

Sakatas “trade only the perfect Flag” Homma.