Flag
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
A pattern where a sharp price move (flagpole) is followed by a parallelogram-shaped consolidation phase that slopes gently against the trend. A bull flag forms a downward-sloping parallel channel after a sharp rally, while a bear flag forms an upward-sloping channel after a sharp decline. After a brief period of profit-taking and consolidation, price breaks out again in the original trend direction.
Enter when price breaks above the upper edge (bull flag) or below the lower edge (bear flag) on a closing basis. Confirm volume increase at breakout.
Add the flagpole length (range of the sharp move) to the breakout point from the flag to determine the price target. For example: if the flagpole is 200, add 200 from the breakout point.
Place a stop-loss near the opposite side of the flag from the breakout. For a bull flag, set below the most recent low of the flag's lower boundary.
Volume surges during the flagpole, decreases significantly during flag formation, and increases again at breakout.