Bear Flags are a commonly used chart pattern with a high probability of success. These patterns represent a bearish continuation, with price consolidating before continuing its downward trend. The initial straight downward move is known as the Flag Pole, and can be used to determine potential profit targets.
The top of the consolidation channel is an aggressive entry point, while a more conservative entry point occurs after the pattern has broken and the price has retested the bottom of the Bear Flag.
Some key features of these patterns include consolidation in a parallel channel, shakeouts towards the end of the pattern, and a general preference to look for Bear Flags in a downtrend.
Aggressive entries often occur around the 618 Fib retrace level, while targets can be the Measured Move of the pattern (usually the flagpole) or Fibonacci Extension levels.
