Flag and pennant
Flags and pennants are trend continuation patterns: a short pause after a sharp move (the pole), after which price often keeps going in the same direction.
How it works
First comes the pole, a strong, almost vertical move on high volume. Then price rests. If the pause looks like a small sloped rectangle tilted against the move, it is a flag. If it looks like a small symmetrical triangle, it is a pennant.
During the pause volume usually drops and the pullback is shallow, often no more than a third to a half of the pole. That suggests few sellers (or buyers, in a bear flag), so the move may continue. Bull flags form after rallies and bear flags after drops.
The classic target is the pole's length, projected from the breakout point. Flags form fast, over a handful of candles. If the pause drags on or the pullback gets too deep, the pattern loses its meaning.
SOL jumps from $150 to $180, a $30 pole. Over a few days price drifts down in a narrow sloped channel between $176 and $170. A break above the top edge at $176 gives a rough target near $206. A stop often goes below the flag's lower edge.
The mistake is calling every pause after a rally a flag. Without a sharp pole and with a deep pullback it is no longer continuation but a possible reversal or range. Check that there was an impulse and that volume fades during the pause, and enter only after price breaks the flag's edge.
Questions and answers
What is a flag pattern in simple terms?
It is a short breather after a sharp move, shaped like a flag on a pole. Afterward price often continues in the same direction.
What is the difference between a flag and a pennant?
A flag is a small sloped rectangle, a pennant a small symmetrical triangle. Both are continuation patterns that follow a sharp move.
How do you calculate a flag target?
Measure the length of the pole and project it from the flag's breakout point. It is a rough guide and is not always reached.
Related terms
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Updated: 2026-10-19