Chart pattern
Bear Flag explained
A bear flag is a short pause after a sharp fall. A strong move down (the pole) is followed by a small, upward-sloping or sideways channel (the flag), and the pattern suggests the decline may resume.
How to spot it
- Find a sharp decline that forms the pole.
- Look for a tight, slightly upward or sideways channel on lower volume.
- Mark the upper and lower boundaries of the flag.
- Watch for a close below the lower boundary as the resumption signal.
What invalidates it
The pattern is invalidated if price closes above the flag's high, or if the bounce retraces most of the pole.
Common mistakes
- Treating every bounce in a downtrend as a flag
- Entering before the lower boundary breaks
- Placing a stop inside the flag's noise
- Ignoring nearby support that might stop the decline
Questions
- Is a bear flag the same as a relief rally?
- They look similar. A bear flag is a specific, orderly and shallow bounce that ends with a break lower, while a relief rally can turn into a reversal.
- Does volume matter?
- Declining volume in the flag and rising volume on the break are often cited, but they are not required.
- What invalidates it?
- A close above the flag's high, which suggests buyers have taken control of the move.
Related patterns
See how patterns are applied to a specific instrument in the market guides.
Educational content, not financial advice. Chart patterns describe what price has done and do not predict what it will do next.
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