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Flag (bull flag, bear flag)

A short, tight consolidation that slopes against a sharp prior move, expected to resolve in the direction of that move.

Bull flagA steep rise, a small channel that drifts slightly lower, then a second rise out of the channel.pricetime1. the pole2. the flag3. the continuation
The bull flag. A sharp advance (the pole) followed by a small channel that drifts gently lower (the flag); here the advance then resumes out of the channel. A bear flag is the same shape upside down: a fast drop, then a slow drift higher.

The sharp move is the pole; the tight pullback is the flag. A bull flag drifts down or sideways after a rally on falling volume; the breakout above the flag on rising volume is the entry. Bear flags mirror this.

The measured target is the pole height added to the breakout point. Flags fail when the pullback retraces too much of the pole or when volume does not confirm.

Example: a stock runs from $20 to $26 in two days (pole), then drifts to $24.50 over three days (flag). A break of $25.20 targets $25.20 + $6 = $31.20.

Related: breakout, pullback, volume, head-and-shoulders

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