Trading term
What is Bear flag?
A bear flag is a continuation pattern in a downtrend: a sharp drop (the pole), then a short, tidy bounce that drifts up or sideways in a narrow channel (the flag), then a breakdown below the flag that resumes the fall.
It's a bull flag upside down. The pole is a fast drop, the flag is a weak bounce in a small channel on lighter volume, and the signal is a close below the flag's lower rail. The bounce inside a bear flag often looks like a recovery to someone who wants one, which is why the pattern catches so many people.
The measured move works the same way: take the pole's height and subtract it from the breakdown price. Treat it as a zone to watch rather than a place price has to reach.
A bounce that recovers most of the pole, or lasts longer than the pole took to form, isn't a flag any more. It's a possible bottom, and it should be read as one.
For example
A stock falls from $119 to $96 in eight days. It then bounces from $96 to about $101 over twelve days in a narrow rising channel on light volume. Then it closes below the channel. The tool reads that chart as a bear flag that broke down, with the breakdown price as the level above which the break has failed and the measured move as the level below.
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Explore Premium →Why it matters to you
The bear flag is the pattern that turns a hopeful bounce into a defined trade. For someone holding the stock, it's a warning: a weak bounce on light volume after a sharp drop is the market resting on the way down, not turning. For a short seller, the flag's high is the stop and the pole is the target.
⚠ Every bounce is not a bear flag
A bounce on strong volume that recovers most of the drop is a reversal attempt, not a flag. The flag is specifically a shallow, quiet bounce. Reading every rally in a downtrend as a bear flag is how people short the bottom.