Define the bear flag before studying its exit: context, boundaries, volume and invalidation belong in the same written research record.
What defines the bear flag
A bear flag begins with a sharp downward pole and pauses inside roughly parallel rising or sideways boundaries. The gentler recovery differs from the initial decline. The pole is necessary to the continuation reading; two rising parallel lines on their own merely describe a channel.
The preceding trend and duration
The bearish continuation case compares the rebound with the preceding decline. A recovery that erases the pole or turns into a long trading range deserves a different label. The shape does not measure borrow costs, short-sale constraints or the size of any future decline.
The illustrated pause occupies 11 sessions. Its average volume is 41% of the pole’s average. These are measurements of this drawing, not thresholds that define every pennant or flag.
A close beyond the boundary
The downward illustration closes below the lower flag boundary. Subtract the pole height from the boundary at that session for a conventional objective. Study the flag high separately as a possible thesis invalidation level rather than treating the objective as an exit guarantee.
| Measurement | Value |
|---|---|
| Event session (leftmost bar is session 1) | 28 |
| Boundary at the exit | 76.40 |
| Close of the exit session | 75.55 |
| Distance beyond the boundary | 1.11% |
| Pole height | 12.00 |
| Conventional projected level | 64.40 |
Illustrative objective = 76.40 − 12.00 = 64.40The projection is a geometric reference. It is not a price forecast, a probability or an instruction to hold until that level. Describe what would contradict the premise before comparing the potential distance with the risk.
Volume through the formation
Compare volume with this stock’s own recent activity and inspect the bars on which it expands. Contracting activity during a pause and expansion at its exit can support a conventional reading, but volume does not choose the direction. A large session may reflect an event, rebalancing or an isolated trade.
| Measure | Hypothetical value |
|---|---|
| Pole, average per session | 189.6 |
| Flag, average per session | 76.9 |
| Breakdown session | 200.0 |
| Breakdown ÷ 20-session average | 1.63 |
The displayed relative-volume calculation divides the event’s volume by the average of the 20 sessions ending with that event; it includes the event itself. It differs from a comparison with the prior 20 sessions and from an intraday comparison at the same clock time.
When the conventional reading fails
The failure chart breaks above the flag high and extends the recovery. That upward escape contradicts the downward continuation premise. The fact that the stock previously fell quickly cannot override later closes above the pause.
Separate this shape from nearby patterns
A bear pennant converges after its pole. A rising wedge also narrows, and can appear without a sharp decline. A bull flag is the directional counterpart after an upward impulse.
Record a reproducible chart observation
A useful chart record includes the unsuccessful cases. Define your rules before collecting examples and retain the same price scale, adjustment basis and candle interval throughout the sample.
- Record the preceding swing direction, formation duration and each boundary touch.
- Write the exact close-based confirmation and the opposite boundary or swing that invalidates it.
- Compare event volume with its named denominator, and review both resolving and failed drawings.
- Check whether a scheduled event, such as an earnings report, falls inside the window you are studying; using earnings dates in research covers where such dates come from.
- Inspect the same stock on the Symbol Analysis guide, then record your observations in a trading journal.
These guides teach manual chart interpretation. A near-high or range screen lists candidates to inspect; it does not identify this formation.
Continue with
- Support, resistance and trendlinesHow horizontal levels and sloping lines are drawn and tested.
- Breakouts and pullbacksWhat a close beyond a level shows, and how retests are read.
- Put stock volume in contextCompare a session’s volume with the same stock’s usual activity.
- Candlestick patternsSingle- and multi-session candle shapes read alongside chart patterns.
- Stop-loss and profit targetsWhere invalidation levels and objectives fit in a written plan.
Sources
Read our data and methodology notes for calculation context. This guide explains research tools and observations. It does not recommend a trade or investment.