What is the Bear Flag chart pattern?

Bull and bear flags are popular trend continuation patterns in technical analysis, but here, we will focus on the bear flag. What is the bear flag chart pattern strategy? A bear flag is a small price consolidation pattern that forms after a rapid price move in a downtrend.

What is a Bear Flag & how does it work?

As said earlier, the bear flag is a continuation pattern that facilitates the extension lower. As a chart pattern itself, the bear flag makes sure that traders are able to identify the stage which the downtrend is currently in. More precisely, the flag will tell us whether the consolidation phase is over as the sellers increase their pressure.

Is a Bear Flag a trend continuation pattern?

As a trend continuation pattern, the bear flag chart is considered a trend continuation pattern. The price pattern will first trend downward until a new support level is established. This is when the flag manifests itself as an upward consolidation channel.

What is a Bear Flag retracement?

In general, the bear flag is considered to be a strong technical pattern. This is especially the case when the retracement ends at around 38.2%, creating a textbook bear flag pattern. Therefore, its greatest advantage is that it offers a very attractiverisk-reward ratio, as levels are clearly defined.