Bullish Flag Pattern
Big Idea: A bullish flag pattern forms when price is in an uptrend and retraces. This retracement helps form what is considered the flag while the initial uptrend is the flag pole. The two price action events help form what looks like a flag, and when traders see this, they can see that the uptrend could be ready to continue.
This is roughly what a bullish flag pattern looks like in price action. You can see a period of a strong uptrend followed by another period of consolidation. Eventually, price breaks above once again to form new highs. This is a common behavioral pattern in most markets that traders like to look for.
-A bullish flag pattern forms after a steep uptrend
-The pattern forms what looks like a flagpole holding a flag
-The period of consolidation is a sign that price is ready to continue its uptrend