Bear flag pattern in K-line chart

The bearish pennant is a common continuation pattern, usually appearing in a downtrend, suggesting that prices may continue to decline after a brief consolidation. It resembles a converging triangle, like a "flag," and serves as a signal for traders to capture trend continuation.

Pattern Composition:

• Flagpole: A sharp initial decline in price, forming a steep downward segment.
• Flag: A minor rebound at lower levels, forming two converging trendlines (upper trendline descending, lower trendline flat or rising), creating a triangle.
• Characteristics: Gradually narrowing volatility and a relatively short consolidation period.

Trading Signal:

When the price breaks below the lower trendline, it indicates that bearish forces have regained dominance, and the downtrend may continue, presenting a potential sell signal. After the breakout, the flag's support often turns into resistance.

The bearish pennant represents a "consolidation phase" within a downtrend, and catching the breakout point can help you trade with the trend.

"This article is for educational purposes only and does not constitute investment advice."