What is a Bull Flag?
A bull flag is a chart pattern created with the price movement in a strong upward trend. The bull flag is characterized by two price rallies interrupted by a short-lasting consolidation period. The pattern is composed of three elements which are:
- The flagpole – often a steep upward movement when the price records consecutive increases that form higher lows and higher highs.
- The flag or consolidation section – is the consolidation period with possible price pullback or retracement following a strong price movement. The flag is identified as two parallel upper and lower trend lines succeeding rebound or consolidation.
- A continuation – is the continuation of price movement toward the original uptrend.