Bearish flag formations signal a move lower in forex and stocks. Bearish flag trade setup is a bearish continuation pattern. This bearish chart pattern is found in a downtrend and signals a move lower. This technical trade setup is called a bear flag because the bearish flag chart pattern resembles a flag on a pole. The pole in a bearish flag chart pattern is formed as a result of a drop in the currency price and the flag results from a period of consolidation. The flag in the bearish flag trade setup can be a horizontal rectangle formed by sideways consolidation or it can slant upwards. Bearish pennant chart pattern in forex is a variation of bearish flag chart pattern in which the price consolidates in the form of a symmetrical triangle.
Bearish flag trade setup is continuation pattern in which currency price has dropped but holds close to the lows, refusing to rise. Generally, the pullback is no more than 23% to 38% fibonacci level. The breakout from a flag often results in a powerful move lower which measures the same as the height of the pole. The move lower in the forex pair can be projected by measuring the height of the pole in the bearish flag trade setup. Bearish flag trade setup and bearish pennant trade setups are the opposite of the bearish flag trade setup in forex where the price drops and the bearish flag setup signifies the move lower. Both bearish flag and bearish pennant trade setups are bearish continuation trade setups in forex.
Today in this Episode, I will show you how to identify a Bearish flag technical trade setup in forex, where to place your stop loss and how to exit the trade profitably.
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