Bull Flag
A sharp upward pole followed by a tight, slightly downward-drifting consolidation channel — a high-probability continuation setup in strong uptrends.
A Bull Flag is a two-part pattern: a near-vertical pole (the initial surge on heavy volume) followed by a flag — a rectangular or gently descending channel that drifts against the trend on lighter volume.
The flag represents brief profit-taking after a strong move. A breakout above the upper channel line, ideally on expanding volume, signals continuation. Target = pole length projected from the breakout point.
- Flags that drift sideways (rather than down) are sometimes called flat tops — equally valid.
- Deep retracements (>50% of the pole) weaken the pattern — the setup should be tight.
On the desk
A small-cap stock gaps up 15% on earnings and consolidates in a tight 3% range for 5 days with declining volume. On day 6, it breaks above the upper bound on 2× average volume — target is the pole height added to the breakout price.