Definition ∞ A bull flag is a chart pattern indicating a temporary pause in a strong upward price movement. It forms after a sharp price increase, followed by a period of consolidation within a narrow, downward-sloping channel. This pattern suggests that the prior uptrend is likely to resume, making it a significant signal for traders monitoring digital asset price action. The formation typically consists of a “pole” representing the initial price surge and a “flag” representing the subsequent consolidation.
Context ∞ In the current market environment, the observation of bull flags is often discussed in relation to broader market sentiment and the potential for sustained upward momentum in specific digital assets. Analysts closely watch for confirmation of this pattern, typically through increased trading volume accompanying a price breakout above the flag’s upper boundary, as it can signal the continuation of bullish trends. The reliability of this pattern is frequently debated in relation to the inherent volatility of cryptocurrency markets.
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