One of the first things you learn in the Chartered Market Technicians coursework is the importance of efficient use of trading capital. One of the suggested patterns int he curriculum is the flag and pennant patterns. A reason for this as follows, ‘ Both flags and pennants are preceded by a steep, sharp price trend, best at 45-degrees rather than straight up. Flags are preceded by a rise of 90% or more have almost a zero failure rate and an average return of 69%. ‘

Flags and Pennants are extremely common and a very, very profitable way to trade, with low risk. I think one of the problems with getting new traders to try these patterns is it actually involves entering tradeshow you should: buy at the bottom and short the tops. Too many new traders wait too long by either by fear or paralysis by analysis and then when they finally do enter a trade, they usually end up buying at the high and shorting the lows. Let’s look at some examples.

Pennants

Flags

BTD

BTD means Buy The Dip. You’ve probably heard this phrase many times but you’ve had difficult identifying when you should buy the dip. You can’t go wrong with buying dips in a flag and/or pennant pattern. What is fantastic about these setups is that you can often find the shape of the triangle pennant or the channel of a flag well before you would see the break out. In other words, you can anticipate when and where a breakout will happen with a low risk entry. And it so happens that Bitcoin is presenting just a pattern right now.

BTD – Current Flag Pattern for Bitcoin

We have a clear (albeit, very steep sloped) flag pattern formed on Bitcoin. There has been some clear selling pressure lately due to both extended technicals and negative news, but the structure remains and we have caught some supportive buying. An entry resting buy order at the 8333 level allows enough room for a confirmation of the breakout as well as an early enough entry to make some profit.