What Is Flag Pattern?
A flag forms after a sharp directional move (the 'pole'). Price then consolidates in a small parallel channel — sloping slightly against the prior trend — for a few bars. Visually it looks like a flag on a pole. The pattern represents a brief pause before continuation.
Bull flags (after upward poles) typically slope down or sideways; bear flags slope up. Standard target is the length of the pole projected from the breakout point. Flags are short-duration: a flag forming over weeks isn't a flag, it's a different pattern.
Flags work because they represent profit-taking that doesn't fully reverse the trend. Entries are taken on the break of the consolidation in the trend direction. Volume should be lower during the flag than during the pole, then expand on the breakout.
Related terms
- Pennant — Symmetrical-triangle consolidation after a strong move, continuation pattern.
- Breakout — A price move beyond an established support, resistance, or chart pattern boundary.
- Trend — The general direction of price movement over a period — uptrend, downtrend, or sideways.
- Consolidation — A range-bound period of relatively quiet price action between trending moves.