Alibaba, Ebay, Sunrun Stocks Look Prepared To Break Out Of This Key Pattern: What's Next?

Alibaba Group Holdings, Ltd BABA, Ebay, Inc EBAY and Sunrun, Inc RUN 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 lower between a channel with parallel lines.

• For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downwards within the following channel 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

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The Alibaba Chart: Alibaba reversed into an uptrend on Oct. 5 after reacting to a bullish double bottom pattern on the daily chart. The stock inclined over 20% and through two resistance levels before bumping into a higher resistance zone on Oct. 11 near the $170 level and rejecting the area. Since the date, Alibaba has been consolidating under the resistance level in a bull flag pattern.

The Ebay Chart: Ebay hit a bottom of $68.28 and Oct. 4 and reversed course into an uptrend, soaring over 11% higher over the four trading days that followed. After the stock bust through a resistance level at $73.97 it began to consolidate, which set up the flag of the bull flag pattern. If Ebay is able to break up from the flag it has a chance to run back toward its all-time high of $77.83.

The Sunrun Chart: Sunrun broke up from a falling channel on Oct. 7 and soared up 20% higher over the four trading days that followed. After busting through a resitance level at $48.13, Sunrun has been consolidating lower. The rise up paired with the consolidation has settled the stock into a bull flag pattern. The consolidation has also helped to cool Sunrun's relative strength index, which gives the stock room for another push higher if the bull flag is recognized.