FuelCell, Nike, SoFi Stocks Prepare For Breakouts In This Bullish Pattern
FuelCell Energy, Inc (NASDAQ: FCEL), Nike, Inc (NYSE: NKE) and SoFi Technologies, Inc (NASDAQ: SOFI) 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 either lower between a channel with parallel lines or into a small tightening triangle.
For bearish traders, the “trend is your friend” (until it’s not), and the stock may continue downwards within the following flag 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.
See Also: Five Common Day Trading Patterns To Know
The FuelCell Chart: FuelCell shot up over 50% higher between Oct. 6 and Oct. 18 and then entered into consolidation in the form of a bull flag. The consolidation is needed to drop FuelCell’s relative strength index, which hit an uncomfortable 73% on Monday. FuelCell’s flag is being formed in a tightening triangle pattern and bulls can watch for a break of the upper descending trendline before Oct. 25.
The Nike Chart: Nike reversed course into an uptrend Oct. 1 and soared 10% higher before cooling off. The rise between Oct. 1 and Oct. 18, paired with Tuesday and Wednesday’s consolidation, has formed a bull flag pattern on the daily chart.
The SoFi Chart: On Tuesday, SoFi attempted to break up from a descending trendline that has been holding the stock down since it reached a Feb. 1 all-time high of $28.26. SoFI may need to consolidate under the trendline in order to garner the strength to break upward for a longer period. So far, the consolidation has settled SoFi into a bull flag pattern, with the pole created between Oct. 11 and Oct. 18 and the consolidation beginning on Tuesday.
Photo courtesy of Nike.
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