Forex glossary
Flag
A flag is a small consolidation within roughly parallel channel boundaries after a distinct move called the flagpole. It often slopes against that move. A breakout with the pole is interpreted as a continuation setup; projecting pole height gives a conventional target without a universal success rate.
Illustrative example
How does it work in practice?
Assume a rise from 100 to 110, then a narrow downward channel between 108 and 110, with a breakout at 109. Projecting the ten-unit pole gives 119 as a conventional target.
A case to work through
A channel after a sharp move
Hypothetically, a move from 70 to 80 precedes a short consolidation bounded by roughly parallel lines.
- The preceding move provides a candidate pole.
- Parallel boundaries fit a flag; converging boundaries would better fit a pennant.
What follows? Describe the geometry and define the breakout separately.
Example boundary: Boundary and duration rules vary; the shape does not confirm continuation.
A useful distinction
Flag / Pennant
A flag forms a small channel; a pennant narrows after its pole.
Check your understanding
Distinguish consolidation shape from the preceding move.
Show the answer and explanation
Parallel rather than converging boundaries
Both structures can follow a pole.
Geometry and pattern completion
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Read the fuller explanation
Related terms
Sources and documentation
- StockCharts – flags and pennants
A preceding pole and parallel or converging short consolidation boundaries.
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