Learning to Trade a Bear Flag Pattern

It is a powerful tool, but just like any other element of technical analysis, it should not be used in isolation. A bear flag pattern is a reliable indicator for predicting the continuation of a bearish trend. However, it is crucial to remember that this pattern is best used in downtrends. This means that you should look for bearish signals before entering any trade. Also, be sure to place your stop loss above resistance so that you can protect your capital if the trade goes against you. Since bull and bear flag patterns represent that an asset is overbought or oversold, respectively, they’re often combined with various technical indicators, like the RSI.

Our content is packed with the essential knowledge that’s needed to help you to become a successful trader. Feel free to ask questions of other members of our trading community. We realize that everyone bear flag meaning stocks was once a new trader and needs help along the way on their trading journey and that’s what we’re here for. Although the pattern seems simple, the key to a successful trade is to identify it correctly.

What does a bull flag indicate?

Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Historical or hypothetical performance results are presented for illustrative purposes only. An advantage of the bull flag is that it suggests particular profit targets and allows for the setting of a tight stop loss, as explained below.

Tom Bulkowski’s research confirms an accuracy of 45 percent for bear flag patterns with an average profit potential of 9 percent. As it’s the case with a bull flag, its bearish counterpart consists of the flagpole and a flag. The former is constituted after the price action trades in a downtrend, making the lower highs and lower lows. Once the new low is in place, the price action starts to rebound higher as the sellers take a breather.

What is a bull flag?

You might see two identical Bear Flags but, one is worth trading, and the other you want to avoid at all cost. Just choose the course level that you’re most interested in and get started on the right path now. When you’re ready you can join our chat rooms and access our Next Level training library. We are opposed to charging https://www.bigshotrading.info/blog/head-and-shoulders-pattern/ ridiculous amounts to access experience and quality information. Also, we provide you with free options courses that teach you how to implement our trades as well. If you would like to contact the Bullish Bears team then please email us at bbteam[@]bullishbears.com and we will get back to you within 24 hours.

It’ll either be confirmed or unconfirmed, and you hold it as unconfirmed till it is confirmed. A flag’s pattern is also characterized by parallel markers over the consolidation area. If lines converge, the patterns are referred to as a wedge or pennant pattern. These patterns are among the most reliable continuation patterns that traders use because they generate a setup for entering an existing trend that is ready to continue.

How to trade bull and bear flag patterns?

For any flag pattern, it is generally recommended to enter a trade a few time periods after the initial breakout to help reduce the risk of a false signal. Brokerage services for alternative assets available on Public are offered by Dalmore Group, LLC (“Dalmore”), member of FINRA & SIPC. “Alternative assets,” as the term is used at Public, are equity securities that have been issued pursuant to Regulation A of the Securities Act of 1933 (as amended) (“Regulation A”). These investments are speculative, involve substantial risks (including illiquidity and loss of principal), and are not FDIC or SIPC insured.