What is a Bear Flag?
Bear Flag is a chart pattern that indicates the continuation of a downward trend in financial markets. It consists of a sharp price decline, followed by a period of consolidation in the form of a flag-shaped pattern.
During this consolidation phase, trading volume typically decreases, indicating a lack of buying interest and a potential weakening of bullish momentum. Traders keep an eye on the bear flag pattern as it signals that sellers are still dominating the market.
Once the consolidation phase ends, there is a high probability of the price continuing its downward movement. Confirmation of the pattern occurs when the price breaks below the lower border of the flag.
By understanding the bear flag pattern, traders can identify potential trading opportunities and make informed decisions to take advantage of downward trends in the market.