What is Flag and pennant?

Flags and pennants are short "breather" patterns after a sharp move. They usually resolve in the trend's direction, so they are considered continuation patterns.

Structure

• The flagpole — a sharp, often high-volume move over a few days or weeks.
• The flag — a small parallel channel that follows, usually tilted slightly against the move (slightly down in a bull flag).
• The pennant — the same kind of pause, but shaped like a small symmetrical triangle instead of a channel.

Signs of a good flag

• The pause is short (a few days to 2–3 weeks) and shallow — usually retracing less than half of the pole.
• Volume shrinks inside the flag: sellers aren't aggressive, it's just profit-taking.
• The breakout comes with volume expanding again.

Target

The measured move: the pole's length is added to the breakout point (subtracted for a bear flag). The stop goes beyond the opposite edge of the flag, which is why flags often offer a good R:R.

When it fails

If the pause is too deep (more than half the pole retraced) or lasts too long, it is no longer a flag — momentum is gone. Bear flags exist too: a slightly upward-tilted channel after a sharp drop, followed by a breakdown.