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Flag & Pennant Patterns

Master the "Resting Trend." Learn to identify these short-term continuation patterns that signal a trend is ready to resume its primary move.

Market Continuity Trend Resumption Continuation Patterns Intermediate

What are Flags & Pennants?

The Bullish or Bearish Pause

Flags and Pennants are short-term continuation patterns that occur after a sharp, impulsive move (the "pole"). These patterns indicate that the market is "pausing to breathe" before the move continues in the same direction. They are incredibly reliable because they represent a natural rebalancing of supply and demand after an aggressive price push.

Pattern Identification

Structural Clues

The Pole: A steep, sharp price movement that sets up the pattern.
The Flag: A rectangular consolidation zone that slopes *against* the trend (e.g., a slight downward slope in a bullish trend).
The Pennant: A symmetrical triangle consolidation that forms after the pole.

Validation: The pattern is confirmed when the price breaks out of the flag or pennant structure in the same direction as the original pole.

Frequently Asked Questions

How do I set my targets?

A classic rule is to measure the height of the "pole" and project that same distance from the breakout point of the flag/pennant.

What happens if it breaks the wrong way?

If the flag breaks against the direction of the "pole," it is not a continuation pattern—it's a reversal. Exit immediately; these patterns are invalid if they break the wrong way.