A sharp move (the pole). It forms after a strong move.

The target is based on:

The pole length. Project the pole.

A flag that retraces too much is:

Suspect. Deep retracement weakens the pattern.

Flags and Pennants

Short pauses after sharp moves, then continuation.

A flag is a small rectangle sloping against the prior sharp move (the pole). A pennant is a small symmetrical triangle after the pole. Both show consolidation before continuation.

Enter on the breakout in the direction of the pole. The target is the pole length projected from the breakout. They should be short, typically a few days to a few weeks.

Long consolidations lose their strength. A flag that retraces more than half the pole is suspect.

Key takeaways

Pole plus short consolidation
Trade the breakout in the pole direction
Target = pole length

Quiz

A flag follows: Answer: A sharp move (the pole). It forms after a strong move.
The target is based on: Answer: The pole length. Project the pole.
A flag that retraces too much is: Answer: Suspect. Deep retracement weakens the pattern.

Educational content, not financial advice.