Bull flag and bear flag

A flag has two parts. The pole is a steep, high-volume move. The flag is a small, orderly consolidation, usually a narrow channel tilted against the move, with fading volume as traders take a breather. In a bull flag, a breakout above the flag's upper line signals that the rally is resuming. A bear flag forms after a sharp drop, with a slight upward drift that ends when price breaks below the flag. Pennants are similar, with a small triangle instead of a channel.

Flags are among the most traded continuation patterns in crypto because the market's fast moves often stop to digest before continuing. The usual target projects the pole's length from the breakout point, and stops go on the opposite side of the flag.

Flags fail often, especially when the broader trend is weak or volume does not return on the breakout. A flag that drifts too long or too deep loses its meaning and is better read as a range or a reversal.