Srading.com

Menu
  • Home
  • Markets
    • Forex
    • Stock
  • Fundamental Analysis
    • Economics
    • Money & Banking
  • Technical Analysis
    • Drawing Tools
    • Chart Patterns
  • Tools
    • Online Charts
    • Economic Calendar
    • Interest Rate Today (Live Widget)
    • Forex Market Hours
    • Currency Indexes Chart
    • National Holiday Calendar
    • CoT Chart
    • Quotes
Home
Technical Analysis
Chart Patterns
Flag Pattern: Types, How to Trade & Examples
Chart Patterns

Flag Pattern: Types, How to Trade & Examples

November 4, 2022 Zafari

The flag pattern is a continuation structure appearing on any financial asset chart.

And a flag pattern resembles a flag or a rectangle.

Flags are short-term structures. And they are among the most reliable structures which around 70% of the time predict correctly.

There are bullish and bearish flag patterns. And this article explains both of them.

You Will Continue Reading

Toggle
  • Bullish Flag Pattern
  • Bearish Flag Pattern
  • How to Trade Flag Patterns?
  • Examples of Flag Patterns
    • Bullish Flag Pattern Examples
      • Example #1
      • Example #2
    • Bearish Flag Pattern Examples
      • Example #1
      • Example #2
  • Flag and Pennant Patterns
  • Practice What You Learned

Bullish Flag Pattern

A bullish flag pattern forms in the middle of a strong uptrend. It is a bullish continuation pattern.

A bullish flag structure appears in the middle of an uptrend. It suggests that the underlying bullish trend will continue.

Moreover, it indicates that bulls have huge control over the market.

A flag pattern starts with a flagpole, a bullish trend with heavy volume. Then, a small correction appears that has a slight downward slope. Finally, after breaking the flag’s resistance line, it spikes with heavy volume.

Bullish flag pattern

It is buying signal when the price breaks the upper line (resistance line). Usually, there is a pullback. So, it is better to put SL low enough not to close the position too early.

Bearish Flag Pattern

A bearish flag pattern appears in the middle of a steep downtrend. And it suggests the continuation of the underlying falling direction.

A bearish flag structure is an indication of bears’ control.

Bearish flag chart patterns start with a flagpole, generally a sharp trend. Then the flag forms that has a small upward slope. Finally, the price breaks the support line of the flag and continues falling with heavy volume.

Bearish Flag Pattern

It is a selling signal when the price breaks the support line. And the stop loss should be put at the top of the flag.

In the stock and crypto markets, bearish flags take less time to develop than bullish flags. They take less time because of panic associated with downtrends in the stock market.

However, in the forex market, there are no differences.

How to Trade Flag Patterns?

Flag patterns form very frequently, and they are reliable continuation patterns. 

A flag pattern shows a pause after a full attack by bulls (in an uptrend) or bears (in a downtrend). And it is powerful because of the trend strength.

Here are things to consider when you discover these patterns:

  1. Before the breakout, look for candlestick patterns inside the flag. A candlestick pattern confirms if the breakout is false or right. 
  2. A technical indicator helps you find if the market is in an overbought or oversold condition.
  3. Buy when the price breaks the resistance trendline of the bullish flag and sell when the price breaks the support trendline of the bearish flag. Moreover, look at the inside of the flag in a lower timeframe to see what happens there.
  4. Notice that the distance between the support and resistance lines of the flag suggests how long it will take to break the pattern. A higher distance leads to a longer time to complete the structure, and a short distance leads to a shorter time required for the development.
  5. Check fundamental tools (ex: economic calendar) and news to make a better decision.
  6. Put your stop-loss below the resistance trendline of the bullish flag pattern and above the resistance line of the bearish version. Do not forget to put a stop-loss because the v-shaped pattern can form after the breakout, which is a reversal pattern.
  7. If you want to place a take-profit, its distance from the breakout should be the size of the flagpole. Often, professional traders do not place a take-profit instead, adjust the stop-loss level. It is up to you to choose which one suits you.

Examples of Flag Patterns

This article provides you with four flag pattern examples, two from each bullish and bearish version.

Bullish Flag Pattern Examples

Example #1

In late July and Early August of 2021, the Meta made a bullish flag pattern after a gap-up. The gap itself followed a bullish engulfing candlestick pattern. In this pattern, the flagpole is the gap.
The flag lasted 4 sessions (days) and then the price continued rising.

Meta and a bullish flag
Meta chart by TradingView

Going to a lower time frame helps with timing. It decreases your risk since you can put stop-loss tighter.

The above pattern, in the hourly chart, also made a flag. Moreover, at the end of the flag, there was a hammer.

Thus, a flag at a higher time frame, a flag at a lower time frame, and finally the hammer decreases your risk and increases your reward.

Meta making a hammer inside a flag
Meta chart by TradingView

Example #2

In mid-January 2017, the Meta chart made a bull flag pattern with a series of red candles.

It formed in the middle of a spike and continued rising.

This flag was a zigzag structure in lower time frames which is another confirmation of the continuation of the trend.

Meta making a bullish flag chart pattern

Bearish Flag Pattern Examples

Example #1

The Meta chart made a bearish flag pattern that started in late January and lasted till late February.

The flagpole started after the earning report of full 2019 fiscal year. Even though the earnings were better than expected, the price fell due to a 51% rise in expenses related to privacy and security issues. And it reminds us of the importance of blending fundamental analysis with technical analysis.

The stock price of Meta fluctuated and completed the flag. It broke the support trendline of the flag probably due to coronavirus fears.

Moreover, the spinning top candle is another confirmation for bears becoming series about dropping the price.

Meta chart formed a bearish flag pattern
Meta chart by TradingView

Moreover, a bear flag pattern appeared in the hourly chart after a long red candle. And this pattern, in addition to news of the coronavirus, was supporting signals for future falls.

Meta made a bearish flag chart pattern
Meta chart by TradingView

Example #2

In mid-April 2022, the Amazon stock made a bearish flag pattern.

At the end of the flag, two candles formed a bearish harami pattern, which is a downtrend signal.

Amazon chart made a bearish flag structure
Amazon chart by TradingView

Flag and Pennant Patterns

Flags and pennants are similar.

However, there are some differences.

The followings are key points regarding both of them:

  1. They are both continuation patterns that appear in the middle of a sharp trend.
  2.  Both are short-lived structures
  3.  A pennant is similar to a symmetrical triangle. However, their size is small.
  4.  The flag is similar to a parallelogram. However, it is smaller and tilts a little bit against the trend.
  5.  Both of these patterns are common. However, flags appear more frequently than pennants.

Practice What You Learned

Here is a live chart allowing you to study the past. Find flag patterns and study deeply.

Click on the pencil icon to add drawing tools.

Share
Tweet
Linkedin
Pinterest
Reddit
Email
Prev Article
Next Article
Tags:Forex Pattern Stocks Technical Analysis

Related Articles

Counterattack Candlestick Patterns (How to Trade & Examples)

Counterattack Candlestick Patterns (How to Trade & Examples)

Three White Soldiers Candlestick Pattern (How to Trade & Example)

Three White Soldiers Candlestick Pattern (How to Trade & Example)

Triangle Pattern: Types, Trading Guide & Examples

Triangle Pattern: Types, Trading Guide & Examples

Falling Three Methods Pattern (How to Trade & Examples)

Falling Three Methods Pattern (How to Trade & Examples)

Top Continuation Candlestick Patterns

Top Continuation Candlestick Patterns

Hammer Candlestick Patterns (Types, Strategies & Examples)

Hammer Candlestick Patterns (Types, Strategies & Examples)

About The Author

Zafari

Zafari is a professional trader and has been in the financial market since 2014. He has a bachelor of public economics and an MBA. For some reason, he does not show his face. And he loves you all!

Leave a Reply Cancel Reply

Recent Posts

  • Capitalism: The Definitive Guide
    What Is Capitalism? Capitalism is an economic and political system …
  • Trading Checklist: What It Is, Info-graphic, and …
    What Is a Trading Checklist? A trading checklist is a …
  • Private Equity (PE): What It Is, How …
    Private equity is an investment in a private company. The …
  • Government Spending: The Definitive Guide
    Government spending refers to the government’s total expense and the …
  • Three Basic Economic Questions Explained in Simple …
    Three basic economic questions are: Who answers these questions? The …

Popular Posts

    Srading.com

    QUICK LINKS

    • About
    • Cookies Policy
    • Terms & Conditions
    • Disclaimer
    • Privacy Policy
    • Contact Us

    LATEST POSTS

    • Capitalism: The Definitive Guide
    • Trading Checklist: What It Is, Info-graphic, and PDF
    • Private Equity (PE): What It Is, How It Works, & How to Get In
    • Government Spending: The Definitive Guide
    • Three Basic Economic Questions Explained in Simple Words

    FOLLOW US ON SOCIAL MEDIA

    • Facebook
    • Twitter
    • LinkedIn
    • Instagram
    • Pinterest
    • Telegram
    • Reddit
    • YouTube

    Trading financial assets are risky. Everything you read on this website is just for educational purposes or personal opinions only. Read our DISCLAIMER!

    Copyright © 2025 Srading.com
    Call on WhatsApp

    Ad Blocker Detected

    Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by disabling your ad blocker.

    Refresh
    We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By continuing this website or clicking “Accept”, you consent to the use of ALL the cookies.
    Do not sell my personal information.
    Cookie SettingsAccept
    Cookies Policy
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
    CookieDurationDescription
    cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
    cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
    cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
    cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
    cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
    viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
    Functional
    Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
    Performance
    Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
    Analytics
    Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
    Advertisement
    Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
    Others
    Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
    SAVE & ACCEPT