How to read a Bear Flag
A bear flag is the bull flag turned upside down. Price drops fast, then bounces weakly in a tight channel before sellers take over again. It shows up most after a failed breakout or a hard morning fade, when trapped buyers are looking for any bounce to get out.
What it looks like
First comes the drop: several wide red candles, usually with volume rising as it falls. Then the bounce, which should look tired. Small candles, light volume, price grinding up or sideways in a narrow channel.
The weaker the bounce, the better the flag. If the bounce gets back more than half of the drop, or comes in on bigger volume than the selloff, buyers may be taking control and you're looking at a reversal, not a flag.
How traders read it
Short sellers wait for price to break below the bottom of the flag. Traders who are already long treat the same break as their signal to get out, which is part of why the move after it can be quick.
The stop for a short usually goes just above the flag's high. A rough target is the length of the first drop measured down from the breakdown point, though on intraday charts the nearest support level often stops price first.
If you only trade long, the pattern is still useful. It tells you not to buy the bounce.
When it fails
Low-float small caps are dangerous to short this way. A crowded short can squeeze straight through the top of the flag, and those moves are violent. A bear flag sitting right on top of a big support level, like the day's open or VWAP, is also less reliable, because buyers already have a reason to defend that price.
A breakdown that gets bought straight back into the flag is a warning. When that happens, the shorts who just entered become the fuel for a move up.
Practice it
Open an example above and replay it. Pause during the bounce and decide where you'd short and where you'd cover if you were wrong. The simulator lets you short, so you can take the trade and see what it feels like.
Educational content only, not trading advice. Patterns describe what price did, not what it will do next.