What it means
A pennant is the same idea with a small converging triangle.
In practice
A flag is a rest inside a trend. After a sharp move, price drifts back in a tight, orderly channel on lighter volume while traders who missed the move wait for a second chance.
The entry is usually the break of the flag's edge in the direction of the pole, with the stop beyond the other side of the flag. Many traders project the length of the pole from the breakout as a target.
What to watch for
The flag should be small and shallow compared with the pole. A pullback that retraces most of the move or drags on for a long time is no longer a flag, and its breakout is far less reliable.