Bearish Flag Chart patterns

When a trending price pauses and goes back over slightly in a rectangular range, the flag pattern occurs.

This pattern gives us the opportunity to enter the market in the middle of a trend.

The break out in price continues its original strong down trend, gives us the chance to enter that trend at a better price than before the formation of the flag. 

How to identify bearish Flag patterns?

The chart below is an illustration of bearish flag pattern.


Enrich Broking: Flag Chart Patterns

Enter your trade

Wait until the price has broken out of the Flags upper trend line in the direction of the original uptrend.

Place a long buy entry order once the candle that has broken out of the flag pattern has completed.

Placement of entry, stop loss and take profit orders in a Bearish flag during a downtrend:

Technique 1

The chart below is an illustration: 


Enrich Broking: Bearish Flag Chart

1- Sell Entry

2- Stop loss

3- Take profit

Height of number 2 is the same as the height of number 2

Practice session:

Exercise 1: Place your entry, stop loss and profit target. Show exercise

Technique 2:

“Wait till the price comes back to test the lower trend line as resistance

Enter your trade after the price falls below the Flag lower trend line.

Once support breaks, place a sell order after the price retests that trend line.

The broken support now becomes resistance.

The chart below is an illustration:


Enrich Broking: Flag Chart Patterns

Number 2: Pole of the pattern

Number 1: Area where price has found resistance at the previous support line.

1- Sell Entry

2- Stop loss

3- Take profit

Height of number 2 is the same as the height of number 2

Place your stop loss above the new resistance area.

Bearish Flag Chart Pattern Trading Strategy

A bearish flag chart pattern is a chart formation that often precedes an impending market decline. A bearish flag chart pattern appears following a period of declining prices and is created by the price action in an upward-sloping trendline. If you are trading short-term, the flag chart pattern day trading can help to increase your probability of success. For a long-term position, the bear flag chart pattern indicates that shorts may be closing in, and it’s time to lock in your profits. The flag chart pattern is drawn when a trend line crosses through another line and closes at or near its highs. This indicates that sellers have been exhausted and buyers have been replenished.

Nut Shell

An overview of the lesson discussed so far….

When a trending price pauses and goes back over slightly in a rectangular range, the flag pattern occurs.

This pattern gives us the opportunity to enter the market in the middle of a trend.

The break out in price continues its original strong trend, gives us the chance to enter that trend at a better price than before the formation of the flag.

Trading a bearish flag pattern: Wait for the price to break out of the Flags lower trend line in the direction of the original downtrend. Place a sell (Short) order here.

Place your stop loss at the level where the Flags Higher trend line reaches its highest point.

Calculate how far the price rose in its initial downtrend.

Place your profit target the same distance above the level where the Flags lower trend line ends.

Frequently Asked Questions

Peak Margin-Enrich

A flag chart pattern is a graphical representation of the price movement. It consists of an upward-sloping line called the “flag” and two parallel lines representing support and resistance, respectively. A flag chart pattern is very similar to triangles, except they are more horizontal than ascending or descending. There are several different types of flag chart patterns, i.e., bearish flag chart patterns. If you’re looking for a long-term investment vehicle, these pennant patterns tend to do well over time. You need to identify them quickly. This type of flag chart pattern is also known as a reverse continuation.

The difference between a flag chart pattern and a pennant is its shape. Whereas diagonal lines characterize pennants, flags take on an X-shape. But aside from their shape, there are few differences between these two chart patterns. Both are continuation patterns, meaning they’re formed after the price has advanced for some time. They differ in direction, and pennants are bullish chart patterns while flags are bearish flag chart patterns. Because it might be difficult to distinguish between a pennant and a flag chart pattern based solely on technical analysis alone, investors should keep both types of patterns in mind as they look at charts for trading opportunities.

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The flag chart pattern is reliable for long-term investing but may not be worth it if you’re looking for short-term gains. The flag chart pattern is also known as a pennant or wedge chart pattern. The identification of a bearish flag or bullish flag depends on the price movements leading up to it. While we can’t say with 100% certainty that a flag chart pattern day trading will always lead to a drop-in price after it completes, we can say that in most cases, prices do not correct upward. The fact is, you should treat any potential investments carefully when looking at chart patterns.

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A flag chart pattern is a candlestick chart pattern with long shadows and gaps between their high and low. It shows that the stock prices are likely to continue in the previous direction. A flag chart pattern consists of a relatively significant price movement followed by a relatively small retracement back to the breakout level. When you do flag chart pattern day trading, you enter at the breakout of the flag. If the getaway is upward, you buy with your expectation that the price will move higher. If it is downward, you enter with the expectation that the price will move lower.

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