Don't Ignore This Chart!

A Bullish Continuation Pattern Forms in the Biotech iShares


The Biotech iShares (IBB) surged off support in mid-May and then stalled the last two weeks with a bull flag taking shape. 

A bull flag is a short-term bullish continuation pattern. These patterns form after a sharp advance and represent a rest or consolidation. This is often needed to digest the gains and prepare for the next leg higher. 

Flags can be flat or slope down and they fly at half-mast. Thus the pole we see in the chart below is only a half pole. A flag breakout would signal a continuation of the prior advance and project a similar move higher. Thus, the length of the pole can be added to the flag low for an upside target. 

The chart below shows IBB with a falling flag and a breakout at 108 would target a move to the 114 area. The pole extends from 108 to 100 (8) and the flag low is around 106 (106 + 8 = 114).

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Highlights from On Trend for Tuesday, May 29th

  • What do Trendlines Actually Measure
  • Measuring Risk On/Off (Dollar, Gold, Yen, Treasuries)
  • Euro Breaks Down and Yen Bounces
  • Gold Becomes Oversold within an Uptrend
  • Italy and Spain Lead Europe Lower (international index symbols)
  • QQQ, Top QQQ Stocks, XLF and XLV

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- Arthur Hill, CMT

Senior Technical Analyst,

Book: Define the Trend and Trade the Trend
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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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