True flags are rare. Indicated by a compact sideways price action with top & bottom lines paralell. Two shown here on ES 30m. A bull flag is one where the lead-in is up. A bear flag is one where the lead-in is down.
Typically, the impulsive move out of the flag will be preceded by:
- a sharp move down (in the case of a bull flag). A bear trap. Then it continues up. - a sharp move up (in the case of a bear flag). A bull trap. Then it continues down.
In these two examples, there's a measured move. ie. lead-in leg is equidistant to follow-on leg.
