Flag and pennant
A compact pause after a directional impulse.
What to look for
- Impulse exceeds a predefined ATR or percentile threshold
- Consolidation is smaller and shorter than the impulse
- Slope and overlap rules are explicit
A strong upward move is followed by a shorter, overlapping pullback channel. The setup completes when a later candle closes above that channel.
For a bear flag, start with a strong fall and wait for a close below the smaller pullback. A pennant uses converging rather than parallel lines.When the pattern is confirmed
A close beyond the consolidation in the impulse direction.
Where the idea is wrong
A break of the opposite consolidation boundary.
The easy mistake
Calling any channel a flag ignores the required prior impulse.
A complete flag and pennant example
Require a directional impulse larger than a fixed ATR or percentile threshold, followed by a shorter and smaller consolidation. Show a compact mid-trend pause beside an ordinary drifting channel.
First rule to test
Continuation close — enter no earlier than a close beyond the consolidation in the original impulse direction.
Alternative rule
Breakout retest — wait for the confirmed boundary break to be revisited and defended before entering.
Place it where the pattern is wrong
Place the example stop one fixed ATR fraction beyond the opposite consolidation boundary at the time of entry.
Context, trigger and risk
The pattern handles timing. The other tools decide whether the location makes sense and how far normal price movement can reach.
Defines the minimum impulse and maximum consolidation size.
Adds an independently tested trend-strength condition.
Provides a simple directional baseline for the prior trend.
First exit to test
Flagpole projection — project the measured impulse length from the consolidation breakout.
Alternative exit
Trailing structure — exit when a completed counter-swing breaks after the continuation begins.
Patterns need a method around them
Open a related strategy to see the wider market filter, entry, stop, exit and no-trade rule.
Trend pullback
Research whether shallow retracements inside an objective trend resume in its direction.
- ENTRY
- After eligibility is true, place a market order at the next H1 open when the signal candle closes beyond the highest high of the previous two pullback bars for a long, or below their lowest low for a short.
- STOP
- Place the stop 0.25 × ATR(14) beyond the pullback extreme. Size so entry-to-stop risk equals 0.50% of demo equity, rounded down to 0.01 lot; never widen the stop.
- EXIT
- Place a fixed target at 2R immediately after entry. If neither stop nor target trades first, exit at market after 24 completed H1 bars.
Donchian breakout
A rules-first breakout framework based on new lookback extremes.
- ENTRY
- Enter at the next H4 open after a completed close above the prior 20-bar upper channel for a long or below the lower channel for a short.
- STOP
- Initial stop is 2.0 × ATR(20) from the actual fill. Size to risk 0.50% of equity, rounded down to 0.01 lot; never add to or widen the position.
- EXIT
- Exit at the next H4 open after a completed close through the opposite 10-bar channel. The initial 2 ATR stop remains active until that exit.
EMA and ADX trend filter
Combines direction from an EMA with a non-directional trend-strength filter.
- ENTRY
- Enter at the next H4 open after the eligible boundary close.
- STOP
- Stop 1.5 × ATR(14) from fill. Risk 0.50% equity and round down to 0.01 lot.
- EXIT
- Take profit at 2R. Exit early at next open after a completed close crosses EMA(50) against the position.
Try it on older charts
Group examples by the strength of the first move, how far price pulls back and how long the pause lasts.