A Bear Flag is a chart pattern indicating a potential continuation of a downtrend. It typically forms after a sharp price decline, creating a consolidation phase. During this phase, the price may move slightly upward, resembling a flagpole.

The structure of a Bear Flag involves two main components: the flagpole and the flag. The flagpole is the steep drop in price, while the flag is the slight upward movement that follows. This pattern often signals that sellers are still in control and that the price may soon resume its downward trend. Traders watch for a breakout below the lower trendline of the flag.

If the price breaks downward, it can confirm the Bear Flag, suggesting further losses ahead. It’s important for traders to manage risk properly, as this pattern may not always lead to a continuation of the downtrend.