Bull Flag
Chart PatternsA bullish continuation pattern where a sharp rally (the flagpole) is followed by a brief downward-sloping consolidation (the flag). Price typically breaks upward to continue the trend.
What Is a Bull Flag?
A bull flag consists of two parts: a strong, steep rally called the "flagpole," followed by a relatively brief, downward-sloping Consolidation that forms the "flag." The flag portion moves against the prevailing trend but retraces only a portion of the flagpole's gain, typically between 30% and 50%.
The flag is usually bound by parallel trendlines, creating a small downward channel. This brief pullback represents profit-taking by short-term traders after the initial surge.
How to Trade a Bull Flag
On EUR/USD, enter long when price breaks above the upper trendline of the flag. Stop loss goes below the flag's low. The target is calculated by measuring the flagpole's length and projecting it upward from the breakout point.
The best bull flags show declining volume during the flag formation and increasing volume on the breakout, confirming that the pullback was just a pause.
Bull Flag vs. Pennant
A bull flag has parallel trendlines (a downward channel). A Pennant has converging trendlines (a small triangle). Both are bullish continuation patterns with similar trading rules. The distinction is mainly visual.
Related Terms
Bear Flag
A bearish continuation pattern where a sharp decline (the flagpole) is followed by a brief upward-sloping consolidation (the flag). Price typically breaks downward to continue the trend.
Pennant
A small symmetrical triangle that forms after a sharp move (flagpole), representing a brief pause before the trend continues. It looks like a tiny converging triangle on a pole.
Ascending Triangle
A bullish continuation pattern with a flat resistance line and a rising trendline connecting higher lows. Price typically breaks upward through the flat resistance.