The pattern, which could be bullish or bearish, is seen as the market potentially just taking a 'breather' after a big move before continuing its primary trend. The pole is formed by a line which represents the primary trend in the market. These lines can be either flat or pointed in the opposite direction of the primary market trend. The flag pattern is encompassed by two parallel lines. They are continuation patterns and form when the asset prices rally or fall sharply. The patterns are characterized by a clear direction of the price trend, followed by a consolidation and rangebound movement, which is then followed by a resumption of the trend. The flag and pennant patterns are commonly found patterns in the price charts of financially traded assets ( stocks, bonds, futures, etc.).
