What is a Bear Flag?

As mentioned earlier, the bear flag is a bearish continuation pattern. The first step in identifying the bear flag is to look for a downtrend. Next, the rebound should take place within an ascending channel, while we monitor the degree of the correction.

Why is the stock market forming a bearish flag?

There’s some buying pressure pushing the price higher and it’s likely from traders taking profit on their short positions. If nothing changes, the market is likely to continue lower by forming a bearish flag. “Let me find some Bear Flag patterns to short and make some easy profits!” Well, not so fast. Here’s why…

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.

What is a bearish flag & how does it work?

The bearish flag is a candlestick chart pattern that signals the extension of the downtrend once the temporary pause is finished. As a continuation pattern, the bear flag helps sellers to push the price action further lower.