Flag Pattern
A short, shallow consolidation in a small parallel channel that slopes against the direction of a sharp preceding move.
How it is identified
Test: a steep prior move, followed by a brief parallel-sided consolidation retracing only a small portion of it
Unit
qualitative
In depth
The flag is defined by three conditions that make it reasonably objective: the prior move must be steep, the consolidation brief, and the retracement shallow — typically less than a third of the advance. Depth is the condition most often ignored, and a consolidation retracing half the prior move is not a flag by any standard definition. Volume conventionally contracts during the flag, which at least gives a second testable criterion. The formation is described here; whether the prior direction resumes is unknown and is not asserted.
Worked example
A rise from ₹462 to ₹534 is ₹72. A drift down to ₹516 over six sessions retraces 18 / 72 = 25% and fits the definition; a drift to ₹490 retraces 61% and does not.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Flag Pattern” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.