Bull Flag

A bullish technical chart pattern characterized by a sharp upward price spike followed by a brief, downward-sloping consolidation channel.

A bull flag is a short-term continuation pattern in technical analysis that signals a strong upward price trend is likely to resume. The pattern resembles a flag on a pole: the "pole" is formed by a rapid, near-vertical price surge on high trading volume, and the "flag" is a subsequent orderly, downward-sloping consolidation channel on lower volume. This consolidation represents temporary profit-taking by early buyers, while institutional demand prevents the price from falling significantly. A breakout occurs when the price pushes above the upper boundary of the flag consolidation channel, usually accompanied by a surge in volume, confirming that buyers have regained control. Investors look for bull flags to enter strong momentum trends at relatively low-risk entry points. A common strategy is to place a buy order just above the flag's upper resistance line, while setting a stop-loss order just below the lower support line of the flag to limit potential losses if the pattern fails.

A stock surges rapidly from $20 to $30 on high volume, creating a $10 flagpole ($30 - $20 = $10). The stock then drifts downward in a tight, parallel channel between $27 and $29 on low volume, forming the flag. If the stock breaks out above the upper resistance line at $29, the pattern is triggered, pointing to a projected target of $39 ($29 breakout price + $10 flagpole height).