Flag and Pennant Patterns: Bull and Bear Flags and Pennants

Where this page's information comes from

• StockCharts' ChartSchool, its guide to flags and pennants, for the conventions on the flagpole, shape, duration, volume and targets. Those points are attributed in the text.
• Thomas Bulkowski's pages on flags and pennants and his glossary on ThePatternSite, for his qualitative identification notes and his definitions of pullbacks, throwbacks and busted patterns.
• TradingLoot's own explanations and diagrams. They describe how these patterns are commonly read, not rules that guarantee an outcome.

Bulkowski's pages also publish performance statistics and a target method built on them. This guide leaves both out, because the market, period and method behind the figures aren't set out on those pages. For how he measured patterns, see our summary of his encyclopedia.

The flagpole and the move before it

Everything starts with the pole. ChartSchool describes flags and pennants as following a sharp advance or decline, usually on heavy volume, that breaks a trend line or a support or resistance level; that move is often the first leg of a larger move, and the flag or pennant is a pause within it. Without a sharp move, it says, the pattern's reliability is questionable. Bulkowski's identification notes agree that the pole should be unusually steep and last several days.

Two time horizons are worth separating. The flagpole is the immediate impulse just before the pattern. The broader trend before that can be different: Bulkowski notes that the price trend leading into the pattern can run in any direction. In TradingLoot's reading, the sharp pole is what defines these patterns; the longer trend is context, not a requirement.

Flags: bull and bear

ChartSchool describes a flag as a small rectangle that slopes against the previous move: down after a rise, up after a fall. Because flags are usually too short to form clear reaction highs and lows, it says, price should simply be contained between two parallel lines. Bulkowski describes the same shape as a small rectangle often tilted against the prevailing trend.

Pennants: bull and bear

A pennant follows the same kind of pole, but its consolidation narrows. ChartSchool describes it as a small symmetrical triangle that starts wide and converges as it matures, and Bulkowski calls it a short symmetrical triangle. As with flags, price may not form neat reaction highs and lows, so the lines simply contain the consolidation.

Flags, pennants, triangles and channels

Parallel lines alone don't make a flag, and converging lines alone don't make a pennant. What identifies them is the context: a sharp impulse, followed by a short consolidation. A long sideways or sloping channel that develops without that impulse is usually read as a channel or range in its own right.

Duration is the other dividing line. ChartSchool says a flag that lasts more than about twelve weeks would be classified as a rectangle, and a pennant that long would become a symmetrical triangle. Shape tells you which family a consolidation looks like; the pole and the duration tell you whether it's a flag or pennant at all.

Duration

ChartSchool describes flags and pennants as short-term patterns lasting roughly one to twelve weeks, ideally one to four. It notes that the timeframe is debated: some consider eight weeks to be pushing the limit, and it calls the reliability of patterns between eight and twelve weeks debatable.

Those figures are a source's conventions, stated in weeks. In TradingLoot's view, they don't convert automatically to other chart timeframes: a flag on an intraday chart can't be judged by dividing weeks into hours. What carries over is the proportion: the consolidation should be brief relative to the pole that came before it.

Continuation reading vs breakout direction

ChartSchool treats flags and pennants as continuation patterns: for a bullish flag or pennant, it reads a break above resistance as the previous advance resuming, and the mirror for bearish ones. Bulkowski's research measures breakouts in both directions, which is a reminder that the pole doesn't fix the exit.

That's why every diagram above shows the alternative exit as a separate dashed branch. Once price leaves the pattern convincingly, you know the direction it took. That doesn't guarantee the move will continue or reach a target. As the hub explains, a pattern's family is a convention, not a promise about direction.

Confirmation and volume

The break is the line that decides the reading: for a bull flag or pennant, a convincing move above the upper boundary; for a bear one, below the lower boundary. Sources differ on what counts as convincing, and the hub explains the filter trade-off.

ChartSchool expects heavy volume during the pole, which it says legitimises the sudden move, and treats an expansion of volume on the breakout as lending credence to the pattern. Bulkowski's identification notes describe volume tending to decline while the flag or pennant forms.

How much weight volume can carry depends on the data. In TradingLoot's view, the volume a platform shows may not represent the whole market, for example where trading is spread across many venues, and some feeds show tick counts rather than traded volume. Treat volume as one input to weigh, not a switch that confirms or cancels a pattern.

Retests, pullbacks and throwbacks

After a breakout, price may come back to the boundary it just crossed. Bulkowski names these returns by direction: a throwback after an upward breakout and a pullback after a downward one, each a return to the breakout price within 30 days.

A retest is a possibility, not a step in the pattern. With patterns as short as flags and pennants, a return that carries back through the boundary and out the other side isn't a retest any more: it's a failed breakout.

The measured-move convention

ChartSchool measures the flagpole, from the break of the earlier support or resistance level to the high or low of the flag or pennant, and applies that length from the breakout. Marker 4 in the flag diagrams shows the idea. It's also why ChartSchool notes that these patterns often mark a midpoint of the move.

Treat the result as a guideline, not a forecast of distance or timing. Bulkowski describes a different target method that depends on his own success-rate figures, which this guide doesn't reproduce. For why TradingLoot doesn't publish hit rates for targets, see probabilities and limits.

False breakouts and failed patterns

A flag or pennant can go wrong before or after the breakout. Before it, the consolidation can drag on, lose its shape or outlast the pole, and stop qualifying as a flag at all. After it, price can leave the pattern, make little progress, and fall back through it. That second case is a failed breakout, shown below for a bull flag; a failed bear flag is the mirror image.

Bulkowski uses a narrower, technical term for one kind of failure. His busted pattern is one where price moves no more than 10% after the breakout, then reverses and crosses the other side of the pattern, starting a trend in the new direction. Not every failed breakout meets that definition, and the diagram doesn't measure it. For why failures still carry information, see our summary of Bulkowski's research on failure.

Textbook vs live charts

Live flags and pennants are rarely as clean as the diagrams. The pole may come in two or three bursts, the consolidation may poke slightly outside its lines, and a flag can drift into a pennant shape or the reverse. The tidier the drawing has to be forced, the less the label is telling you.

In TradingLoot's view, practising on historical data with replay is a good way to check whether you would have identified the pole and drawn the boundaries in real time, rather than after the breakout.

Common misreadings

These are ways flags and pennants are often misread, as TradingLoot sees it.

"Any small channel is a flag."

Without a sharp pole before it, a short channel is just a short channel.

"A bull flag always breaks upward."

ChartSchool reads it as continuation, but the breakout decides the exit, and it can go either way.

"A breakout means the move will continue."

It shows the direction price took. It doesn't guarantee follow-through.

"The duration rules work on any chart."

ChartSchool's guideline is stated in weeks, and even it is debated. Don't convert it mechanically.

"The measured move is the target."

It's a convention for a rough reference point, not a forecast of distance or timing.

Key takeaways

• Flags and pennants are defined by a sharp pole followed by a short consolidation.
• Flags have parallel boundaries; pennants have converging ones.
• The continuation reading is a source's interpretation; the breakout decides the exit.
• A confirmed breakout shows direction, not follow-through.
• Duration rules and measured moves are conventions, not certainties.
• A busted pattern is Bulkowski's narrower definition of one kind of failure.

Further reading

• Triangle Patterns: converging boundaries over a longer period, and why the breakout can go either way.
• Head and Shoulders Pattern: a reversal pattern confirmed by a break of its neckline.
• Double Top and Double Bottom Patterns: two similar peaks or lows, confirmed by a break of the level between them.
• Encyclopedia of Chart Patterns by Thomas Bulkowski: how he measured patterns, including how they fail.
• Technical Analysis of the Financial Markets by John J. Murphy: a broad foundation in which price patterns are one of many tools.
• Chart Patterns: the method that applies to every pattern.