Bullish Flag / Bearish Flag
A Flag is a short consolidation that appears after a strong price push. The market pauses, forms a small channel, then often continues in the same direction.
Bullish Flag follows an up-move.
Bearish Flag follows a down-move.
How to Identify
Flagpole. Look for a strong price move in one direction.
Flag. Price then moves sideways or slightly against the trend in a small channel.
Breakout. Watch for a solid break of the channel in the same direction as the original move.
How to use
Entry: you can wait until price clears the small channel, confirming the flag breakout.
Stop: a typical spot is below (for bullish) or above (for bearish) the flag pattern.
Target: measure the length of the flagpole and project it from the breakout point for a rough profit goal.
Pro Tips
Check volume or momentum for a burst on the breakout. That can add confidence.
Avoid trading flags that look too flat or choppy — clean structures tend to work better.
Watch for larger support or resistance levels that might interfere with the follow-through.
Exercise
Scan your charts for a clear surge followed by a narrow consolidation. Mark the flag, wait for price to exit that range, and note where you’d enter and place a stop. In your backtest, see if price reaches your projected target or reverses. Repeat on a variety of symbols and timeframes.
Last updated