Etsy, Lululemon, Moderna Form Bullish Patterns: What To Watch
Etsy, Inc (NASDAQ:ETSY), Lululemon Athletica (NASDAQ:LULU) and Moderna, Inc (NASDAQ:MRNA) have all settled into bullish flag patterns on the daily chart. The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines.
- For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downwards within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.
- Bullish traders will want to watch for a break up from the upper descending trendline of the flag formation, on high volume, for an entry. When a stock breaks up from a bull flag pattern, the measured move higher is equal to the length of the pole and should be added to the lowest price within the flag.
A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern or if the flag falls more than 50% down the length of the pole.
Etsy’s bull flag pattern was created between Aug. 19 and Wednesday with the flag formed between Aug. 19 and Sept. 3 and the flag between Sept. 3 and Wednesday.
The bull flag on Lululemon’s chart was formed between Sept. 8 and Wednesday with the pole created on Sept. 8 and Sept.9 and the flag between Sept. 9 and Wednesday.
Moderna’s bull flag was created between Aug. 30 and Wednesday with the pole formed between Aug. 30 and Sept. 10 and the flag over the days that have followed.
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