A bull flag pattern is a bullish chart pattern that signals a continuation of an uptrend. It is formed by two rallies separated by a brief consolidating retracement period, where the price action consolidates within two parallel trend lines in the opposite direction of the uptrend before breaking out and continuing the uptrend. The pattern is called a bull flag because it resembles a flag on a pole, where the pole is the result of a vertical rise in a stock and the flag results from a period of consolidation. The shape of the flag is not as important as the underlying psychology behind the pattern, which is that despite a strong vertical rally, the stock refuses to drop appreciably, as bulls snap up any shares they can get. The breakout from a bull flag often results in a powerful move higher, measuring the length of the prior flagpole. The key elements of a bull flag pattern include:

• Flagpole: A steep, short-term uptrend that forms the directional bias of the market.
• Flag: A period of consolidation that follows the flagpole, forming a tilted rectangle with parallel upper and lower trendlines.
• Breakout: The breakout forms when the upper resistance trendline breaks again as prices surge back towards the high of the formation and explode through to trigger another breakout and uptrend move.

The bull flag pattern is a reliable, consistent, and common pattern that traders should be aware of. It is found anywhere from the daily chart to the 5-minute chart. The pattern is not limited to stocks and can also be found in cryptocurrencies.