Identification: A flag pattern can be identified by looking for a price patter that, in a shorter time frame, moves opposite to the existing price trend observed during a longer time frame. It is named because of the way it reminds the viewer of a flag on a flagpole.
Occurrence: This pattern occurs during a counter movement after a rapid price movement in a particular direction.
Study: The flag pattern is used to identify the possible continuation of the previous trend from a point at which price has drifted away from the same trend. Should the trend resume, the price increase could be rapid, making the timing of a trade advantageous by noticing the flag pattern.