Bearish Flag
The Bearish Flag is a chart patterns indicator used in Skyrexio Strategy Builder for pattern recognition and reversal/continuation signals.
Introduction
The Bearish Flag is a bearish continuation chart pattern that signals potential SHORT opportunities or LONG position exits. This pattern occurs after a strong downward move (flagpole) followed by a brief consolidation (flag) that slopes slightly upward or sideways, indicating the downtrend is likely to continue.
How Bearish Flag Works
Bearish Flag is a bearish continuation chart pattern with specific characteristics:
• Flagpole formation - Strong downward price movement with high volume • Flag consolidation - Brief upward sloping or sideways consolidation • Volume pattern - Decreases during flag formation, increases on breakdown • Confirmation requirement - Pattern confirmed when price breaks below flag support • Target calculation - Flagpole height subtracted from breakdown point
Key Characteristics
Category
Chart Patterns
Type
Bearish Continuation Signal
Primary Use
SHORT entries, LONG exits
Timeframe
All timeframes supported (1m to 1M)
Confirmation
Flag breakdown, volume, trend context
Strategy Applications
🔴 SHORT STRATEGY (Primary Use)
Bearish Flag is primarily a SHORT signal - enter short positions when the flag breaks to the downside with volume confirmation.
Base Entry Order (SHORT)
Base Order Condition: Bearish Flag breakdown
First Condition: Bearish Flag
Timeframe: 1H
Additional Confirmation:
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1HAdditional Entry Orders (SHORT)
Additional Entry 1: Pattern confirmation with momentum
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 45
OR
Additional Entry 2: Breakdown acceleration
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1HTake Profit Orders (SHORT)
Rule 1: Exit condition - Flagpole target reached
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H
OR
Rule 2: Exit condition - Oversold warning
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 22
OR
Rule 3: Exit condition - Volume declining in downtrend
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1HStop Loss Orders (SHORT)
Rule 1: Stop loss - Flag breaks above resistance
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H
OR
Rule 2: Stop loss - MACD bullish divergence
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Above
Second Condition: MACD Signal Line
Timeframe: 1H
OR
Rule 3: Stop loss - Volume pattern fails
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H🟢 LONG STRATEGY (Secondary Use)
Bearish Flag is used in LONG strategies primarily as an exit signal for existing positions.
Counter-Trend Risk: Using Bearish Flag for new LONG entries is high-risk and should only be considered if the pattern fails with very tight risk management.
Base Entry Order (LONG) - Not recommended
New LONG entries not recommended with Bearish Flag pattern. Use bullish continuation patterns instead:
Take Profit Orders (LONG) - Exit existing positions
Rule 1: Exit condition - Bearish Flag signals trend continuation
First Condition: Bearish Flag
Timeframe: 1H
OR
Rule 2: Exit condition - Flag breakdown confirmed
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H
OR
Rule 3: Exit condition - Volume confirms breakdown
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1HStop Loss Orders (LONG) - Protect existing positions
Rule 1: Stop loss - Bearish Flag confirms downtrend
First Condition: Bearish Flag
Timeframe: 1H
OR
Rule 2: Stop loss - Flag support break
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H
OR
Rule 3: Stop loss - Volume surge on breakdown
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1HAdvanced Strategy Combinations
Multi-Timeframe Bearish Flag Analysis (SHORT)
Trend Continuation Strategy (SHORT)
Risk Management Guidelines
Position Sizing
SHORT Strategy
Standard
Pattern in downtrend with volume
LONG Strategy
Avoid new entries
Exit existing positions only
High Volume
Increase confidence
Larger position acceptable
Low Volume
Reduce size
Wait for confirmation
Pattern Reliability Factors
✅ Forms in established downtrends ✅ Volume decreases during flag ✅ High volume on breakdown ✅ Clear flagpole and flag structure
Best Practices
For SHORT Strategies
Trend context - Only trade flags in established downtrends
Volume confirmation - Ensure volume decreases in flag, increases on breakdown
Timing entry - Enter on breakdown below flag support
Target management - Use flagpole height for profit targets
For LONG Strategies
Exit signal only - Use primarily to exit existing LONG positions
Quick recognition - Exit immediately upon pattern completion
No new entries - Avoid new LONG positions with this pattern
Risk management - Protect capital from trend continuation
Common Mistakes to Avoid
Wrong trend context - Trading flags against the main trend
Early entry - Entering before confirmed breakdown
Volume ignored - Trading without proper volume analysis
Target greed - Holding beyond reasonable profit targets
Market Conditions Analysis
Uptrend
🔴 Low (counter-trend)
🟡 Medium (exit signal only)
Downtrend
🟢 High (continuation signal)
🔴 Very Low (against trend)
Ranging
🟡 Medium (breakdown potential)
🟡 Medium (exit signal only)
High Volatility
🟢 High (clear patterns)
🔴 Low (whipsaws)
Low Volume
🔴 Low (wait for confirmation)
🔴 Very Low (avoid)
Related Patterns
Conclusion
Key Takeaways
PRIMARY USE: SHORT entries on flag breakdown in downtrends
SECONDARY USE: LONG exits when holding positions
NEVER: New LONG entries against the continuation signal
ALWAYS: Confirm with Volume and respect trend context
Success with Bearish Flag requires understanding trend context and waiting for proper volume confirmation on the breakdown. The pattern works best when it appears after strong downward moves in established downtrends.
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