A Flag Pattern is a continuation chart pattern, named due to its similarity to a flag on a flagpole. Flags are typically composed of one or more straight lines that move in the same direction and then reverse course. They typically occur after an extended move in one direction, indicating that the trend is likely to continue in that direction for a short period of time. Flags can also be used as part of other patterns, such as pennants and head-and-shoulders formations.Flags are easy to spot on charts, as they have distinctive characteristics which set them apart from other patterns.The most obvious characteristic is the presence of two parallel lines which move in the same direction before reversing course; this distinguishes them from rectangles and channels, which have four parallel lines. In addition, flags usually form after an extended move in one direction; this distinguishes them from pennants, which form during consolidations or pauses within an existing trend. Finally, flags tend to be relatively short-term patterns with durations ranging from several days to several weeks."So there you have it – everything you need to know about flags! Now go out there and start spotting these patterns on your favorite stocks!
