Dictionary

Bear flag

A sharp decline followed by a shallow upward drift, read as a pause before the downtrend continues.

The bull flag. A sharp advance (the pole) followed by a small channel that drifts gently lower (the flag); here the advance then resumes out of the channel. A bear flag is the same shape upside down: a fast drop, then a slow drift higher.

The mirror of bull-flag. A steep drop forms the pole, then price grinds slightly higher in a narrow channel on lighter volume, and the trigger is a break below the flag.

Bear flags in equities tend to be sharper and shorter than bull flags because downside moves are faster, and short covering can make the flag itself run further than expected before rolling over.

The pattern is often confused with a genuine bottom in progress; the difference is only visible after the fact. Requiring the flag to stay below a clear structural level, and treating a break-of-structure to the upside as the invalidation, keeps the trade defined.

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