A Flag pattern is a continuation chart formation that appears after a strong price movement, known as the flagpole. The key difference between a bullish and bearish Flag pattern lies in the direction of the prior trend and the expected breakout.

A bullish Flag pattern forms after a strong upward price movement. The flagpole represents aggressive buying pressure. After this sharp rise, the price enters a brief consolidation phase that typically slopes slightly downward or moves sideways, forming the “flag.” This pause reflects temporary profit-taking rather than a reversal. Volume usually declines during consolidation and then increases again on the breakout. When price breaks above the upper boundary of the flag, it signals a potential continuation of the uptrend.

In contrast, a bearish Flag pattern develops after a strong downward move. The flagpole forms due to heavy selling pressure. Price then consolidates in a small upward-sloping or sideways channel. This upward drift represents short-term relief buying, not a change in trend. Volume typically decreases during consolidation and expands when price breaks below the lower boundary of the flag, signalling further downside continuation.

In summary, both patterns share similar structure and psychology, but the bullish Flag signals trend continuation upward, while the bearish Flag signals continuation downward.