Trading term

What is Bull flag?

A bull flag is a continuation pattern in an uptrend: a sharp rise (the pole), then a short, tidy pullback that drifts down or sideways in a narrow channel (the flag), then a breakout above the flag that resumes the rise.

The pole is the point. A bull flag only means something after a strong, fast move up, because the flag is the market catching its breath after that move rather than reversing it. The flag itself is a small channel that slopes gently against the pole, on lighter volume than the pole. The signal is a close above the flag's upper rail, ideally on volume picking up again.

The classic target is a measured move: take the height of the pole and add it to the breakout price. It's a projection, not a promise, and a lot of flags run out before they reach it.

A flag that pulls back deeper than the pole, or drags on for weeks, has stopped being a flag. At that point the market isn't pausing, it's changing its mind.

For example

A stock runs from $93 to $116 in eight days. It then drifts from $116 down to about $111 over twelve days in a narrow channel on light volume. Then it closes above the channel. The tool reads that chart as a bull flag that broke out, with the breakout price as the level below which the break has failed and the measured move as the level above.

Go hands-on in Premium

That's Bull flag in theory — it clicks when you read it on a live chart. Practise it hands-on in the TradeWize Premium Technical Analysis track.

Explore Premium →

Why it matters to you

Flags are the most common way a trend continues, and the flag's low gives you a clean place to be wrong. A trade on the breakout has a stop below the flag and a target from the pole, which is a defined risk against a defined reward. That's the whole reason traders like them.

⚠ No pole, no flag

A gentle drift down inside an uptrend isn't a bull flag just because it slopes the right way. Without a sharp pole before it, there's no move to continue. Look for the pole first, and be suspicious if you can't find one.

Frequently asked questions

How do you trade a bull flag?

The common approach is to wait for a close above the flag's upper rail, put the stop under the flag's low, and take profit at the measured move, which is the pole's height added to the breakout price. Many traders take some off earlier at the nearest resistance.

What is the difference between a bull flag and a pennant?

Both follow a pole. A flag consolidates in a channel with parallel rails. A pennant consolidates in a small triangle whose rails converge. They're traded the same way.

How reliable is a bull flag?

Reliable enough to be worth learning, not reliable enough to trade without a stop. A flag that breaks out on rising volume, in the direction of the bigger trend, does better than one that breaks out on thin volume against it. No published study puts a single number on it that survives every market.

Read the full guide

Technical analysisBull Flag and Bear Flag: The Pause Before the Trend ContinuesA bull flag is a sharp rise, a short tidy pullback, and a break higher. A bear flag is the mirror. Here's the anatomy, the measured-move target, and what a flag that isn't a flag looks like.9 min readTechnical analysisHow to Draw a Trendline: Three Touches, One Line, and What a Break MeansA trendline connects the swing lows of an uptrend or the swing highs of a downtrend. It needs three touches to mean anything. Here's how to draw one, how to tell a real line from a wish, and what happens when price closes through it.8 min read

Related terms

Anchored VWAPAnchored VWAP is a volume-weighted average price that starts from one candle you choose, rather than resetting at the start of each session. You anchor it to a meaningful event — an earnings gap, a major low, a breakout — and it tracks the average price everyone has paid since.APY (annual percentage yield)APY is the rate you actually earn over a year once your interest starts earning interest of its own. It's the same money as the quoted rate, just counted properly: 5% APR compounded monthly works out to 5.1162% APY.Ascending triangleAn ascending triangle is a bullish continuation pattern: a flat horizontal resistance line on top, with a rising trendline of higher lows beneath it. As the higher lows squeeze price against the ceiling, pressure builds — and it usually resolves with a breakout up through the resistance.ATR (Average True Range)ATR (Average True Range) measures how much a security typically moves in a period — its volatility — as an average of recent trading ranges. It doesn't say which direction price is heading, only how far it tends to travel, which makes it a core tool for stop-losses and position size.
← Back to the full glossary