Bull Flag
Tue, Apr 15A bull flag is a bullish continuation pattern that appears on price charts when an asset experiences two strong upward moves separated by a brief period of consolidation. The first sharp rise — known as the flagpole — happens when buyers dominate the market, pushing prices up quickly.
After this surge, a short pullback follows, forming the flag portion of the pattern. During this phase, profit-taking causes prices to move sideways or slightly downward within a tight range. This creates parallel trendlines — one marking resistance at the top and another showing support at the bottom — forming a small, slanted rectangle.
Even though selling pressure emerges during the consolidation, the pattern still shows underlying strength and buying interest. Some traders take short positions, expecting a reversal, but the structure remains supported by ongoing demand.
During this phase, traders watch closely for a breakout — especially if the price moves back above the upper trendline or hits a new high. This often signals that the bullish momentum has returned and a new rally may be about to begin.
The trendlines are drawn diagonally to reflect this structured pullback. And generally, the sharper and more vertical the initial price spike, the stronger and more reliable the bull flag pattern tends to be.
A bear flag , on the other hand, is essentially the mirror image of the bull flag. It follows the same basic structure but appears during a downtrend, signaling a potential resumption of the downward movement after a short pause.
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