What are bearish Flags & why are they important?

Bearish flags are formations occur when the slope of the channel connecting highs and lows of consolidating prices after a significant move down is parallel and rising. The trend before the flag must be down. Why are Bullish and Bearish Flags important? Flags imply that the market cannot decide whether to break up or down.

What are bullish and bearish Flags?

Technical Analysis – Bullish and Bearish Flags Flags are continuation patterns that form before the market breaks a difficult level. In essence, during the formation of these patterns, the market is building energy to break through. Flags can be either bullish or bearish, and they are part of the overall trend up to that moment.

Is the Bear Flag a reliable price pattern?

The bear flag is regarded as an extremely reliable price pattern when all its unique formation features are adhered to. The table below identifies the advantages and limitations of the bear flag chart pattern: The bear flag and bull flag represent the same chart pattern, however they are reflected in the opposite direction.

What is the bearish flag pattern on the USD/CAD daily chart?

The chart above displays a bearish flag pattern being created on the USD/CAD daily chart. The flag pole has been established by connecting the January 3rd high at 1.36500 with the January 9th low at 1.31800. Totalling the difference between these points culminates in an initial decline of 470 pips.