Bull Flag vs Bear Flag: The Differences, Side by Side

A bull flag and a bear flag are mirror-image continuation patterns. A bull flag forms in an uptrend. After a sharp move up (the flagpole), price drifts lower in a small downward-sloping channel (the flag), and traders watch for a break above the top of that channel. A bear flag forms in a downtrend. After a sharp move down, price drifts higher in an upward-sloping channel, and traders watch for a break below the bottom of it. The shape is the same. The direction, the breakout level and the stop side are reversed.

This article is for education only. It is not financial advice, and no chart pattern guarantees a result. Trading and options involve risk of loss.

The short comparison

| | Bull flag | Bear flag |

|---|---|---|

| Prior trend | Uptrend | Downtrend |

| Flagpole | Sharp move up | Sharp move down |

| The flag itself | Slow drift lower, in a downward-sloping channel | Slow drift higher, in an upward-sloping channel |

| Level traders watch | Break above the flag's resistance | Break below the flag's support |

| Typical stop idea | Below the flag's support | Above the flag's resistance |

| Expected continuation | Higher | Lower |

The descriptions above follow how IG and Babypips explain the patterns.

What they have in common

Both patterns have three parts:

1. The flagpole. This is a strong, fast move in one direction.
2. The flag. This is a calmer counter-trend pause. Volume typically tends to decrease during this consolidation.
3. The breakout. Price breaks out in the direction of the original move. Volume typically increases significantly at the breakout point.

A flag is not a pennant. In a pennant the trendlines converge, while in a flag they do not.

How to tell them apart on a chart

Ask two questions in this order:

1. What was the direction of the sharp move before the pause? Up means you are looking at a possible bull flag. Down means a possible bear flag.
2. Is the pause slanting against that move? A bull flag slants down, and a bear flag slants up. If the pause is flat or slanted the same way as the pole, it is something else, such as a continuing trend or a different pattern.

A slow drift up after a crash can look bullish at first glance, so check the pole before you check the slant. For a fuller walkthrough of the pattern itself, see our bull flag and bear flag explainer.

Targets and stops

A common way to set a target is to measure the height of the flagpole and project that distance from the breakout level. We cover that method in measuring moves in chart patterns. It is a rule of thumb, and price does not have to reach it.

For a bull flag, a stop is often placed below the support of the flag. For a bear flag it is often placed above the flag's resistance. A move through that level signals that the pattern has failed. Where to place a stop loss goes through how to size a stop sensibly.

Where both patterns fail

The pattern is not a guarantee. Breakouts often fail, and a break of the flag that quickly reverses is a classic false breakout. Waiting for confirmation, such as a close beyond the boundary with a pickup in volume, reduces that risk but does not remove it. See how to spot a false breakout for the warning signs.

Quick checklist

• Is there a clear, sharp flagpole in one direction?
• Does the flag slant against the pole in a fairly tight channel?
• Did volume fade during the flag?
• Do you know the breakout level, the stop level and the target before you enter?
• Is the risk small enough that you can accept being wrong?

Frequently asked questions

Is a bear flag just an upside-down bull flag? Yes. IG describes a bear flag as looking like an inverted bull flag.

Are flags bullish or bearish signals? Both are continuation patterns. They suggest the prior trend may resume, and the direction depends on the pole.

How is a flag different from a pennant? A pennant's trendlines converge, and a flag's do not.