A bearish flag is a chart pattern indicating the continuation of a downtrend. Here's a brief summary:
1. **Preceding Downtrend:** A significant initial decline in price forms the "flagpole."
2. **Consolidation Channel:** The price then consolidates within a parallel channel, forming the "flag," typically with decreasing volume.
3. **Breakdown:** The pattern is confirmed when the price breaks below the lower trendline of the flag on increased volume.
4. **Trading Strategy:**
- **Entry Point:** Enter a short position when the price breaks below the flag.
- **Price Target:** Estimate the target by subtracting the flagpole length from the breakout point.
- **Stop Loss:** Place a stop loss above the upper trendline of the flag.
This pattern helps traders identify potential continuation of the downtrend and plan their trades accordingly.
1. **Preceding Downtrend:** A significant initial decline in price forms the "flagpole."
2. **Consolidation Channel:** The price then consolidates within a parallel channel, forming the "flag," typically with decreasing volume.
3. **Breakdown:** The pattern is confirmed when the price breaks below the lower trendline of the flag on increased volume.
4. **Trading Strategy:**
- **Entry Point:** Enter a short position when the price breaks below the flag.
- **Price Target:** Estimate the target by subtracting the flagpole length from the breakout point.
- **Stop Loss:** Place a stop loss above the upper trendline of the flag.
This pattern helps traders identify potential continuation of the downtrend and plan their trades accordingly.