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The High and Tight Flag is a bullish continuation pattern that forms after an explosive price advance of 90% or more in roughly two months. A brief, shallow consolidation (the flag) follows the surge, typically retracing only 10–25% before price breaks out to new highs.
Bulkowski rates this as one of the best-performing chart patterns statistically. The logic is simple: a stock that can double in weeks has extraordinary momentum behind it, and a shallow pullback shows buyers refusing to let go.
This pattern is rare but powerful. Most traders never see it because it requires an extreme prior move. When it does appear, the breakout from the flag tends to be explosive.
The initial surge reflects massive conviction. Something fundamental has changed — earnings surprise, sector rotation, or a paradigm shift. The move is too fast and too large for normal profit-taking to reverse it.
During the flag, weak holders take profits but strong hands refuse to sell. Volume dries up because there's no real selling pressure — holders believe much higher prices are coming.
The breakout occurs when new buyers absorb all available supply in the flag range and push price to new highs. The pattern's rarity makes it even more powerful — when conditions align for a high-tight flag, the underlying momentum is exceptional.
Enter on breakout above the flag's resistance with volume confirmation. Aggressive traders can enter within the flag near support.
Below the flag's low. Given the explosive prior move, this stop is typically tight relative to the potential upside.
Measure the initial advance (pole) and project it from the flag breakout point. Given the pattern's statistical performance, holding for extended moves is justified.
Often 1:3 or better due to tight stops and large projected moves.
This pattern is extremely rare. When you find one, give it attention — Bulkowski's data shows it outperforms nearly every other chart pattern.
High and tight flags are rare — most traders go years without seeing a textbook example. When you spot one, size up. The statistical edge is exceptional.
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