What a flag pattern means
A flag pattern is a short counter-trend pause after a strong impulse move. In a bull flag, price usually drifts lower or sideways after an advance. In a bear flag, price usually rebounds or moves sideways after a decline.
The value of the pattern comes from proportion. A controlled pullback suggests the prior impulse is being digested. A deep or disorderly retracement suggests the impulse may be failing rather than pausing.
- Impulse first
- Controlled pullback second
- Continuation trigger third
- Invalidation near the flag boundary
Quality clues
A cleaner flag often shows a shallow retracement, cooling volume, and price respecting a compact channel. The setup becomes weaker when pullbacks widen, volume expands against the trend, or the flag takes too long to resolve.
For scanner use, Aventra separates the family name from direction. A flag becomes bullish or bearish only after trend context and structure are evaluated together.