What is Flag (Technical Formation)?

In technical analysis, a flag pattern is a formation that is defined by a strong countertrend (the flag) following the short-lived price trend (the flag pole). Flags typically move in the opposite direction of the prevailing price trend, meaning that if the chart is bullish, a bear flag may occur. In contrast, if the chart initially is bearish, a bull flag formation can occur. Flags generally signify a trend reversal or breakout after a period of sideways price consolidation, and are often accompanied by price action and related volume indicators.