Special Report on Gold Bottom Fishing

Bull Flag Pattern Formation

Bull flag is a sharp, strong volume rally on a positive fundamental development, several days of sideways to lower price action on much weaker volume followed by a second, sharp rally to new highs on strong volume. The technical target is derived by adding the height of the flag pole to the eventual breakout level at point (e).

• Bull flag formations involve two distinct parts, a near vertical, high volume flag pole and a

   parallel,  low volume consolidation comprised of four points and an upside breakout.

• The actual flag formation of a bull flag pattern must be less than 20 trading sessions in duration.

• Most flag patterns occur at the middle of the larger move higher for a stock.

• Upside breakouts often lead to small 2-3% rallies followed by an immediate test of the breakout level.

If the stock closes below this level (now support) for any reason the pattern becomes invalid.

Bulls flags are favored among technical traders because they almost always lead to large and predicable price moves. Like all continuation patterns, bull flags represent little more than a brief lull in a larger move higher. Indeed, in many cases the flag pattern will actually take shape in the middle of the ultimate move higher. Bull flags occur because stocks rarely move higher in a straight line for an extended period, instead, the move higher is broken up by brief periods where traders "catch their breath".

The first part of the flag pattern is often called the flagpole or mast. During this phase the stock price skyrockets to a reaction high (a) on some positive fundamental development. Very often this will be the unveiling of a new product, a favorable legal resolution or positive earnings surprise but the change in price is near vertical as would be sellers are overwhelmed by new buyers caught-up in the euphoria of the moment. As the stock soars speculators that were smart enough to have purchased the stock at lower levels begin selling.

At this point the second phase or flag portion of the bull flag begins. Because the flow of news and investor sentiment is overwhelming positive, most of the stock sold by speculators is easily absorbed in the beginning but as time passes fewer investors seem willing to pay the current price. Slowly, the stock price begins to falter on dramatically reduced volume. The descent is slow because bullish sentiment is still very strong.

Target Calculating:- Hight of the Pole from is 494 (1308 - 1802) and we have seen pattern is just forming where it is reverting from the lower trend line support at 1555 and is just trading at 1580$ level. In immidiate term we expect gold to test the higher resistance trend line at 1790$ and may take a short resistance there and there after crosover will bring to the target of 1825$ which will be rise by 2% of the Price, as per the Bull Flag pattern it will give a short profit booking from higher level and retes the breakout trend line at 1790 – 1800$ level and will again enter in the uptrend. On higehr sdie from the breakout pattern above 1790 adding the pole difference expected target comes to 2285$ on higher sdie which can be seen in medium to long term. On lower sdie there is multiple support seen at 1550 – 1535 range; closing basis on weekly chart below support level will confirm the down ternd to continue which is diffuicult at this point of time.