Learn To Trade Forex • Best Forex Trading Course • AsiaForexMentor

  • Best Brokers
    • Choosing Brokers
    • Comparing Brokers
  • Best by Country
    • flags Best Forex Brokers in Taiwan
    • flagsBest Forex Brokers in Singapore
    • flagsBest Forex Brokers in South Africa
    • flagsBest Forex Brokers in Japan
    • flagsBest Forex Brokers in Philippines
    • flagsBest Forex Brokers in Malaysia
    • flagsBest Forex Brokers in Vietnam
    • flagsBest Forex Brokers in India
    • flagsBest Forex Brokers in Thailand
    • flagsBest Forex Brokers in South Korea
    • flagsBest Forex Brokers in China
    • flags Best Forex Brokers in Indonesia
    • flagsBest Forex Brokers in UAE
    • flagsBest Forex Brokers in Dubai
    • flagsBest Forex Brokers in Italy
    • flagsBest Forex Brokers in Spain
    • flagsBest Forex Brokers in UK
    • flagsBest Forex Brokers in US
    • flagsBest Forex Brokers in Australia
    • flagsBest Forex Brokers in Switzerland
  • Brokers Review
  • Ranking List
    • Popular Brokers
      • Pamm Forex Brokers
      • MT4 Forex Brokers
      • MT5 Forex Brokers
      • cTrader Forex Brokers
      • Commodity Brokers
    • By Regulation
      • FCA Regulated Forex Brokers
      • NFA Regulated Forex Brokers
      • NYSE Regulated Forex Brokers
      • ECN Regulated Forex Brokers
    • By Instruments
      • Gold Trading Brokers
      • Oil Trading Brokers
    • By Brokers Types
      • Stp Brokers
      • Market Makers
    • By Prop Trading Firm
    • By Trading Platforms
    • Top 10 Best Forex Brokers
  • Brokers
    • Choosing Brokers Categories
    • Compare Forex Brokers
  • Ranking List
    • Best Forex Brokers
    • Brokers by Country
      • US Forex Brokers
      • UK Forex Brokers
      • Australian Forex Brokers
      • Swiss Forex Brokers
    • Popular Brokers
      • Pamm Forex Brokers
      • MT4 Forex Brokers
      • Commodity Brokers
    • By Regulation
      • ECN Regulated Forex Brokers
      • NYSE Regulated Forex Brokers
      • NFA Regulated Forex Brokers
      • FCA Regulated Forex Brokers
    • By Instruments
      • Gold Trading Brokers
      • Oil Trading Brokers
      • Top 10 Best Forex Brokers
    • By Brokers Type
      • Stp Brokers
      • Market Makers
    • By Prop Trading Firm
    • By Trading Platform
  • Academy
    • Forex Guide
    • Trading Videos
    • Trading Strategies
    • AFM One Core Program
    • Trade Rescue Operation
    • Corporate Training & Advisory
  • Promotions
  • Newsletter
  • Best Brokers
    • Choosing Brokers
    • Comparing Brokers
  • Best by Country
    • flags Best Forex Brokers in Taiwan
    • flagsBest Forex Brokers in Singapore
    • flagsBest Forex Brokers in South Africa
    • flagsBest Forex Brokers in Japan
    • flagsBest Forex Brokers in Philippines
    • flagsBest Forex Brokers in Malaysia
    • flagsBest Forex Brokers in Vietnam
    • flagsBest Forex Brokers in India
    • flagsBest Forex Brokers in Thailand
    • flagsBest Forex Brokers in South Korea
    • flagsBest Forex Brokers in China
    • flags Best Forex Brokers in Indonesia
    • flagsBest Forex Brokers in UAE
    • flagsBest Forex Brokers in Dubai
    • flagsBest Forex Brokers in Italy
    • flagsBest Forex Brokers in Spain
    • flagsBest Forex Brokers in UK
    • flagsBest Forex Brokers in US
    • flagsBest Forex Brokers in Australia
    • flagsBest Forex Brokers in Switzerland
  • Brokers Review
  • Ranking List
    • Popular Brokers
      • Pamm Forex Brokers
      • MT4 Forex Brokers
      • MT5 Forex Brokers
      • cTrader Forex Brokers
      • Commodity Brokers
    • By Regulation
      • FCA Regulated Forex Brokers
      • NFA Regulated Forex Brokers
      • NYSE Regulated Forex Brokers
      • ECN Regulated Forex Brokers
    • By Instruments
      • Gold Trading Brokers
      • Oil Trading Brokers
    • By Brokers Types
      • Stp Brokers
      • Market Makers
    • By Prop Trading Firm
    • By Trading Platforms
    • Top 10 Best Forex Brokers
  • Brokers
    • Choosing Brokers Categories
    • Compare Forex Brokers
  • Ranking List
    • Best Forex Brokers
    • Brokers by Country
      • US Forex Brokers
      • UK Forex Brokers
      • Australian Forex Brokers
      • Swiss Forex Brokers
    • Popular Brokers
      • Pamm Forex Brokers
      • MT4 Forex Brokers
      • Commodity Brokers
    • By Regulation
      • ECN Regulated Forex Brokers
      • NYSE Regulated Forex Brokers
      • NFA Regulated Forex Brokers
      • FCA Regulated Forex Brokers
    • By Instruments
      • Gold Trading Brokers
      • Oil Trading Brokers
      • Top 10 Best Forex Brokers
    • By Brokers Type
      • Stp Brokers
      • Market Makers
    • By Prop Trading Firm
    • By Trading Platform
  • Academy
    • Forex Guide
    • Trading Videos
    • Trading Strategies
    • AFM One Core Program
    • Trade Rescue Operation
    • Corporate Training & Advisory
  • Promotions
  • Newsletter
AFM Proprietary Program
  • Best Brokers
    • Choosing Brokers
    • Comparing Brokers
    • Best CFD Brokers
    • Best ECN Brokers
    • Best MT5 Brokers
    • Best MT4 Brokers
    • Best cTrader Brokers
    • Best Spread Betting Brokers
    • Best PayPal Forex Brokers
    • High Leverage Forex Brokers
    • Best Zero Spread Brokers
    • Lowest Spread Forex Broker
    • Best Raw Spreads Brokers
    • Best TradingView Brokers
    • Best Forex Broker for Beginners
    • Best Forex Brokers for Scalping
    • Best Forex Options Brokers
    • PAMM Account Brokers
    • Best Bitcoin Forex Brokers
    • Best Cent Account Forex Brokers
    • Cheapest Forex Brokers
    • Best Commodities Brokers
  • Best by Country
    • flags Best Forex Brokers in Taiwan
    • flagsBest Forex Brokers in Singapore
    • flagsBest Forex Brokers in South Africa
    • flagsBest Forex Brokers in Japan
    • flagsBest Forex Brokers in Philippines
    • flagsBest Forex Brokers in Malaysia
    • flagsBest Forex Brokers in Vietnam
    • flagsBest Forex Brokers in India
    • flagsBest Forex Brokers in Thailand
    • flagsBest Forex Brokers in South Korea
    • flagsBest Forex Brokers in China
    • flags Best Forex Brokers in Indonesia
    • flagsBest Forex Brokers in UAE
    • flagsBest Forex Brokers in Dubai
    • flagsBest Forex Brokers in Italy
    • flagsBest Forex Brokers in Spain
    • flagsBest Forex Brokers in UK
    • flagsBest Forex Brokers in US
    • flagsBest Forex Brokers in Australia
    • flagsBest Forex Brokers in Switzerland
  • Brokers Review

    Forex Brokers

    • AvaTrade
    • Plus500 標誌 Plus500
    • FP Markets
    • TMGM
    • EXNESS
    • XM
    • JustMarkets
    • HTFX
    • Doo Prime
    • Markets4you

    Stock Brokers

    • XM
    • Interactive Brokers
    • Orbex
    • RoboForex

    Crypto Exchanges

    • Binance
    • Coinbase
    • Gemini Exchange
    • Kraken

    Prop Firms

    • iFunds
    • IC Funded
    • The 5ers Logo (2)-svg The 5%ers
    • TopStep

    Binary Brokers

    • IQ Option
    • Pocket Option
    • RaceOption
    • IQCent
  • Ranking List
    • Popular Brokers
      • Pamm Forex Brokers
      • MT4 Forex Brokers
      • MT5 Forex Brokers
      • cTrader Forex Brokers
      • Commodity Brokers
    • By Regulation
      • FCA Regulated Forex Brokers
      • NFA Regulated Forex Brokers
      • NYSE Regulated Forex Brokers
      • ECN Regulated Forex Brokers
    • By Instruments
      • Gold Trading Brokers
      • Oil Trading Brokers
    • By Brokers Types
      • Stp Brokers
      • Market Makers
    • By Prop Trading Firm
    • By Trading Platforms
    • Top 10 Best Forex Brokers
  • Brokers
    • Choosing Brokers Categories
    • Compare Forex Brokers
  • Ranking List
    • Best Forex Brokers
    • Brokers by Country
      • US Forex Brokers
      • UK Forex Brokers
      • Australian Forex Brokers
      • Swiss Forex Brokers
    • Popular Brokers
      • Pamm Forex Brokers
      • MT4 Forex Brokers
      • Commodity Brokers
    • By Regulation
      • ECN Regulated Forex Brokers
      • NYSE Regulated Forex Brokers
      • NFA Regulated Forex Brokers
      • FCA Regulated Forex Brokers
    • By Instruments
      • Gold Trading Brokers
      • Oil Trading Brokers
      • Top 10 Best Forex Brokers
    • By Brokers Type
      • Stp Brokers
      • Market Makers
    • By Prop Trading Firm
    • By Trading Platform
  • Academy
    • Forex Guide
    • Trading Videos
    • Trading Strategies
    • AFM One Core Program
    • Trade Rescue Operation
    • Corporate Training & Advisory
  • Promotions
  • Newsletter
AFM Proprietary Program

Bull flag, Bear Flag and Pennants – The Verdict

Written by

Ezekiel Chew

Updated on

January 29, 2024

i
Its a default text
January 29, 2024 7:21 am No Comments

 

 

Bull flag, Bear Flag and Pennants - The Verdict

Introduction to bull flag, bear flag and pennants:

In technical analysis, a pennant is a type of continuation pattern formed when there is a large movement in a security, known as the flagpole, followed by a consolidation period with converging trend lines, the pennant, followed by a breakout movement in the same direction as the initial large movement, which represents the second half of the flagpole. On the other hand, a flag is a price pattern that, in a shorter time frame, moves counter to the prevailing price trend observed in a longer time frame on a price chart. It is named because of the way it reminds the viewer of a flag on a flagpole. The flag and pennant patterns are commonly used as a confirmation for a strong trend continuation. There are typically two types of flag, the bull flag and the bear flag. The pattern serves to provide valuable information as it may increase the probability of trades taken by traders of every calibre. As the name suggests, the flag and pennant patterns usually occur as a consolidation in a steep gradient break out. Hence, this gives rise to the observable “pole” in the patterns. Though the pennant may resemble a triangle formation, the difference between the two patterns is the probability of the direction the price action is going to take.

Bull flag, bear flag and Pennants – Quick Setup Tutorial

Content

  1. Types of flag and pennant pattern
  2. Identification of flag and pennant
  3. How to use the flag and pennant
  4. Pros and cons of the flag and pennant pattern strategy
  5. Flag and Pennant Pattern Analysis
  6. Conclusion for bull flag, bear flag and pennants
  7. Infographic

Types of flag and pennant pattern

There are typically two types of flag and pennant patterns, mainly: Bullish and Bearish.

The bull flag pattern consists of an upright pole coupled with a downward channel formed at the tip of the pole.

 

Bull Flag pattern
Bull Flag pattern

The Bear flag pattern on the other hand consists of an inverted pole coupled with an upward channel at the bottom of the pole.

Bearish Flag Pattern
Bearish Flag Pattern

The Bullish Pennant pattern consists of an upright pole coupled with two converging trendlines forming a triangle at the tip of the pole

Bullish Pennant Pattern
Bullish Pennant Pattern

The Bearish Pennant pattern consists of an inverted pole coupled with two converging trendlines forming a triangle at the end of the pole.

Bearish Pennant Pattern
Bearish Pennant Pattern

Back to top

Identification of flag and pennant

A flag or pennant pattern can be found forming after a huge reversal or a break out forming the pole of the pattern. The pole is usually at least twice as large as the consolidation that is about to be formed. However, the price forming the flag pole is allowed to rest but as long as it follows a steep gradient, it is still to be counted as a valid pole. It is also important to note that if the consolidation, the formation of the pennant or flag is too huge with respect to the pole, it is not to be counted as a flag and pennant pattern.

Also read: Fibonacci Trading Strategy

Back to top

How to use the flag and pennant

The application of the flag and pennant patterns stems from the chart pattern that they consist of. For the Flag patterns it is equivalent to playing a channel break out whereas for the Pennant pattern, it is the same as playing a triangle breakout. However, the only difference is the added probability to the direction in which the price action will take. As such for the entry, we will be entering on the high or low of the candle that breaks the flag channel or the pennant triangle on a close.

flag and pennant

When playing a Flag pattern, the stop loss can be determined by taking half of the vertical width of the channel in terms of pips after entry. As for the Pennant pattern, the stop loss can be determined by half of the vertical height of the triangle after entry.

flag and pennant - Stop loss level

When playing a flag pattern, the profit taking level can be determined by the vertical width of the channel in terms of pips, from the top trendline of the downward channel. On the other hand, the profit taking level of the pennant pattern can be determined by the vertical height of the pennant in in terms of pips from the top trendline of the triangle.

flag and pennant - Profit taking level

Back to top

Pros and cons of the flag and pennant pattern strategy

The Flag and pennant pattern strategy allows the trader to be trading with the trend since it is a trend continuation pattern which renders a higher win rate. On top of that, the strategy gives a second chance to re-enter on a huge move that the trader missed out on the first time. To top that off, the consolidation of the flag and pennant pattern often gives rise to huge and powerful breakouts, though not as strong as the one that forms the pole. However, this pattern strategy is prone to many fake outs towards the end of the consolidation. Hence, it is important to confirm the breaking out of the pattern with a candle close above the trend line or channel. Subsequently, the flag and pennant pattern doesn’t naturally form in the market often, especially in higher timeframes. Even if it does form, it may be subjective to spot by traders.

Pros and cons of the flag and pennant pattern strategy

Back to top

Flag and Pennant Pattern Analysis

To find out the profitability of the flag and pennant pattern strategy, we decided to do a back test based on the past 10 trades from 9 May 21 on the H4 timeframe. The rules for entry will be the same as what was mentioned above. We will be back testing this throughout 3 types of trading vehicles, namely, EURUSD for forex, AAPL for stocks and BTCUSD for cryptocurrency. For simplicity, we will assume that all trades taken have a risk of 1% of the account.

Definitions:  Avg Risk reward ratio= ( Total risk reward ratio of winning trades/ total no. of wins)                Profitability (% gain)= (no. of wins* reward)- (no of losses* 1) [ Risk is 1%]

An example of the application of the strategy:

Flag and Pennant Pattern Analysis

For the Backtest results, trades with blue and yellow zones indicate an overall win with the blue zone as reward and the yellow zone as the risk taken.

As shown in our backtest, the win rate of this strategy for EURUSD (Forex) is 80%, AAPL (Stocks) is 90% and BTC (Crypto) is 50%

The average risk reward ratio of this strategy for EURUSD (Forex) is 1.086, AAPL (Stocks) is 1.47 and BTC (Crypto) is 1.677.

The profitability of this strategy for EURUSD (Forex) is 6.69, AAPL (Stocks) is 9.32 and BTC (Crypto) is 3.39.

Also read: Best Forex Pairs to Trade

Table Flag - and Pennant Pattern Analysis

Back to top

Conclusion for bull flag, bear flag and pennants

In conclusion, the bull flag, bear flag and pennant pattern strategy is an overall good strategy with a high average win rate, decent average risk to reward ratio and good profitability. However, it does not take occurrence in the market and when it does, it is a must to take advantage of the scenario. This pattern strategy can definitely be improved further with the help of indicators as well as support resistance lines. It is important to note that this strategy is also extremely subjective. Common mistakes traders would make is by confusing the forming of the flag and pennant patterns with ahead and shoulders or some reversal patterns forming ahead. On top of that, the usage of pending orders in this strategy is not recommended as it may lead to fake outs that can destroy one’s account. Patience is an important aspect of this strategy nevertheless.

Also read: Head and Shoulders Pattern

Back to top

Infographic

Bull flag, Bear Flag and Pennants Infographic

Back to top

 

 

« Previous
Next »
Leave a Reply

Click here to cancel reply.

GET THE PROPRIETARY ONE CORE PROGRAM
The same system I use to make 6 figures a trade with

5 PART SYSTEM TO MAKE REALLY BIG MONEY IN TRADING

FREE TRAINING

We have generated over millions of dollars via trading with the 5 part system outlined in this free training. Download it now before this page comes down or when I decide to stop mentoring.
 

Services

  • AFM One Core Program
  • Corporate Forex Training
  • Trade Rescue
  • Speak At Your Event
  • AFM One Core Program
  • Corporate Forex Training
  • Trade Rescue
  • Speak At Your Event

Resources

  • Forex Trading Strategies
  • Forex Blog
  • Forex Vlog
  • Download Trading Platform
  • Forex Position Size Calculator
  • Forex Brokers Review & Rating
  • Forex Trading Strategies
  • Forex Blog
  • Forex Vlog
  • Download Trading Platform
  • Forex Position Size Calculator
  • Forex Brokers Review & Rating

Company

  • Who is Asia Forex Mentor
  • Asia Forex Mentor Reviews
  • Contact Us
  • Affiliate Program
  • Advertise with us
  • Best Crypto Broker
  • Who is Asia Forex Mentor
  • Asia Forex Mentor Reviews
  • Contact Us
  • Affiliate Program
  • Advertise with us
  • Best Crypto Broker

Address

6 Raffles Boulevard, #03-308,
Singapore 039594

Whatsapp Text: +65 8786 8319

Disclaimer: Any Advice or information on this website is General Advice Only – It does not take into account your personal circumstances, please do not trade or invest based solely on this information. By Viewing any material or using the information within this site you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here by ECG Pte Ltd, it’s employees, directors or fellow members. Futures, options, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures, spot forex, cfd’s, options or other financial products. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
High Risk Warning: Forex, Futures, Stocks, Indexes, Commodities, Crypto and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.

AFM

#1 FOREX MENTOR IN ASIA

©2025 ASIA FOREX MENTOR. All Rights Reserved.

| Disclaimer – Terms of Use | Privacy Policy | Cookie Policy | Privacy Policy – Europe GDPR

English | Français | Deutsch

Facebook-f Youtube Instagram Tiktok Linkedin
Scroll to top

I consent to receiving emails and/or text message reminders for this event.

REGISTER FOR THE MASTERCLASS!