Flags & Pennants
A violent move, then a tight drift against it — the market catching its breath before continuing.
Continuation PatternsIntermediate 5 min read· Lesson 4 of 6 in Chart Patterns
Structure & psychology
The 'pole' is a sharp, near-vertical move; the flag is a small, tight, counter-drifting channel (pennant: a tiny symmetrical triangle) on collapsing volume. Early winners take profits while new demand absorbs them quietly — the healthiest continuation anatomy there is.
Entry
Break of the flag's boundary in the pole's direction, volume re-expanding. The MOMENTUM_BURST_UP condition here catches pole-like ignitions; flags often follow within days.
Stop loss
Below the flag's low (for bull flags). Flags are tight — that's the appeal: small risk against pole-sized reward.
Target
Pole height projected from the flag's breakout — flags 'fly at half mast'.
Failure conditions
Flag retracing more than ~50% of the pole (that's not rest, that's rejection), volume EXPANDING during the flag (distribution, not digestion), or the flag dragging on for weeks and losing its tightness.