Bear Flag
A Bear Flag is a bearish continuation pattern: a sharp drop (the flagpole) followed by a shallow, tight upward-sloping consolidation, which resolves with a break down through the lower flag boundary.
What it measures
The pole is a near-vertical drop. The flag is a tight upward-sloping channel or wedge retracing 30–50% of the drop. Confirmation is a close below the lower flag boundary.
Parameters
| Name | Default | Range | Note |
|---|---|---|---|
| pole_min_atr | 3 | 1–10 | Minimum flagpole drop in ATRs. |
| flag_max_retrace_pct | 50 | 25–75 | Maximum bounce inside the flag before the pattern is invalidated. |
How it behaves
The pattern captures short-covering and dead-cat rallies after a sharp drop. Volume should thin inside the flag and expand on the breakdown. When both conditions hold, the pattern is among the highest-probability short setups in classical TA.
When it misleads
Bear flags fail when the flag retraces more than half the pole — that is usually a full reversal in progress, not a continuation pause. They also fail on the second and third legs of an extended downtrend, when the market is running out of sellers; late-cycle bear flags often mark the actual bottom.
Backtest result
Sourced backtest in preparation — we're running the rule on our own historical candles before publishing numbers we can stand behind.
FAQ
- How aggressive is a bear flag entry?
- Very — you are shorting into a rising counter-move. Wait for the breakdown close, not just an intra-candle touch, before entering.
- Bear flag vs falling wedge?
- A falling wedge has converging lines (narrowing range) and is a bullish reversal. A bear flag is a channel (parallel lines) that slopes up and is a bearish continuation. Different shape, opposite meaning.
- Does the flag colour matter?
- The colour of individual candles inside the flag is noise; what matters is the overall slope (up), the tightness (narrow), and the volume profile (declining).
Build a strategy with Bear Flag
Drop the block into the Nodlow builder and backtest on real historical data.
Try it in the builder