#3 JULY 7, 2011 FLAG PATTERN FORMED AFTER VERTICAL RALLY AS BULLISH SIGNAL

A tight flag pattern formed after a near vertical move usually tends to result in a continuation of the move. In this case there were two successive flag patterns.  I was long XME puts and thought about buying copper as a hedge, but couldn’t bring myself to do the trade, even though I know this is a reliable pattern. The market immediately rallied. Have to pay more attention to this pattern in future.