A bearish flag is a chart pattern used in technical analysis to identify potential downward trends in the price of an asset. It typically occurs in the context of a downtrend and signals that the asset's price may continue to decline after a brief consolidation period.
Here are the key features of a bearish flag pattern:
Flagpole: This is the initial sharp drop in the asset's price, which sets the stage for the pattern. It represents strong selling pressure.
Flag: Following the flagpole, the price enters a consolidation phase, creating a small upward or sideways channel. This phase often appears as a parallelogram or rectangle, and it indicates a temporary pause in the downtrend.
Breakout: The pattern is confirmed when the price breaks out of the consolidation phase in the direction of the prior trend, typically continuing the downward movement. This breakout is usually accompanied by an increase in trading volume.
Here are the key features of a bearish flag pattern:
Flagpole: This is the initial sharp drop in the asset's price, which sets the stage for the pattern. It represents strong selling pressure.
Flag: Following the flagpole, the price enters a consolidation phase, creating a small upward or sideways channel. This phase often appears as a parallelogram or rectangle, and it indicates a temporary pause in the downtrend.
Breakout: The pattern is confirmed when the price breaks out of the consolidation phase in the direction of the prior trend, typically continuing the downward movement. This breakout is usually accompanied by an increase in trading volume.