List of Financial Market Terms

A Bear Flag is very similar to a Bear Pennant.  It is a technical price pattern that indicates bearish price action.  It starts with a swift move to the downside (flag pole) on strong volume, followed by consolidation (flag) on decreasing volume, and finally a push below consolidation support on slightly higher volume.  This is considered a continuation pattern as a result of the downside move that takes place after the initial spike to the downside.

Technical Trader's should wait for the consolidation support break on slightly higher volume before entering a short position based on a Bear Flag formation.  This will greatly increase the probability of success.

Below is an example of a Bear Flag in real life.  The area within the white oval represents the pattern.  You will notice a swift downside move, followed by consolidation, followed by continuation to the downside. 

bear flag example

Related terms: bull pennant pattern, bull flag pattern, bear pennant pattern

See also: Neutral Sentiment, Consolidation, head and shoulders, inverse head and shoulders

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