Bear Flag
Chart PatternsA bearish continuation pattern where a sharp decline (the flagpole) is followed by a brief upward-sloping consolidation (the flag). Price typically breaks downward to continue the trend.
What Is a Bear Flag?
A bear flag is the bearish mirror of the Bull Flag. It starts with a steep decline (the flagpole), followed by a brief upward-sloping Consolidation (the flag). The flag typically retraces 30% to 50% of the flagpole's drop and is bound by parallel trendlines forming a small upward channel.
The gentle rally within the flag represents a brief counter-trend bounce, often driven by short-covering, before the dominant Downtrend resumes.
Trading the Bear Flag
On GBP/USD, enter short when price breaks below the lower trendline of the flag. Place a stop above the flag's high. The target is the flagpole's length projected downward from the breakout point.
Bear flags that form over a relatively short time (3 to 10 candles in the flag) tend to be more reliable than those that drag on for extended periods.
Confirmation Tips
Look for volume to decrease during the flag formation and spike on the Breakdown. If volume increases during the flag's upward drift, it may signal genuine buying interest rather than just a pause. In that case, the pattern may not complete, and the decline may be over. Always let the breakout candle close below the flag before entering, as intraday pierces that close back inside are common Fakeout moves.
Related Terms
Bull Flag
A bullish continuation pattern where a sharp rally (the flagpole) is followed by a brief downward-sloping consolidation (the flag). Price typically breaks upward to continue the trend.
Pennant
A small symmetrical triangle that forms after a sharp move (flagpole), representing a brief pause before the trend continues. It looks like a tiny converging triangle on a pole.
Descending Triangle
A bearish continuation pattern with a flat support line and a falling trendline connecting lower highs. Price typically breaks downward through the flat support.