Flags & Pennants Explained
Flags and pennants are short consolidations after a sharp move — a brief pause where the market catches its breath before continuing in the same direction.
Flag versus pennant
Both follow a steep, near-vertical move called the flagpole. A flag is a small rectangular channel that drifts against the trend; a pennant is a tiny symmetrical triangle. Either way the consolidation is shallow and short — it is a rest, not a reversal.
A bull flag forms after a rally and drifts slightly down; a bear flag forms after a drop and drifts slightly up. The counter-trend drift is what shakes out weak hands before continuation.
Trading continuation
Enter on the break of the flag in the direction of the flagpole. The classic target projects the length of the flagpole from the breakout point — flags often produce measured continuation moves.
Keep it tight: a flag that consolidates too long or retraces more than about half the pole is suspect and may be turning into a reversal. Confirm with market structure holding in the trend direction.
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Play Chart Bound free → Try today's Call the Candle →Frequently asked questions
What is a bull flag?
A short, slightly downward-drifting consolidation after a sharp rally (the flagpole). It signals a pause before price likely continues higher on the breakout.
Are flags and pennants reversal patterns?
No — they are continuation patterns. They mark a brief pause in a strong move, and price usually resumes in the original direction after the breakout.
How do I target a flag breakout?
Measure the height of the flagpole — the sharp move before the flag — and project that distance from the point where price breaks out of the flag.