What does Flag Pattern mean?
The Flag Pattern is a consolidation pattern on price charts, and forms because investors are testing the current trend in price. During the consolidation period that forms the flag, which can last anywhere from one to three weeks typically, price bounces back and forth in a range that is bracketed by parallel diagonal lines.
Flag patterns are considered to be continuation patterns, because typically price will resume its former trend following the completion of the flag pattern. See also Pennant Pattern.