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Investment
Flag Pattern
A short-term consolidation pattern that looks like a flag on a pole and usually continues the previous trend.
Flag patterns are continuation patterns. Bull flags slope slightly down, bear flags slope slightly up. They are popular with day traders and swing traders because the breakout move is often fast and powerful.
It's a little rectangular pause after a strong price run — like a flag waving while the runner takes a quick breath before continuing the race.
Real world: After a sharp rise, price consolidates sideways in a tight channel (the flag). When it breaks out in the same direction as the pole, traders expect the uptrend to continue strongly.
💡 Flag patterns are pause buttons that usually lead to strong continuation moves.