The ascending flag (bear flag) is a continuation figure. The flag is formed by two parallel bullish lines which form a rectangle. It is therefore oriented in the opposite direction of the trend it consolidates. Unlike a bullish channel, this pattern is very short term and signals the need for sellers to take a break.The formation of the ascending flag occurs in a downtrend. Most often, this pause occurs halfway through the movement.
The calculation of the objective is done in relation to the initial trend. We calculate the height of the entire downward movement preceding the formation of the ascending flag and then we report this height to the last high point of the figure.
Notes and Statistics: #
- The more powerful the movement preceding the formation of the flag, the more powerful the movement following the bearish exit.
- The performance of a flag is much less important when it is oriented in the direction of the trend.
- A flag with narrow lines is more efficient than a flag with wide bands.
- A flag is more powerful if there are no false breaks.
- Pullbacks are bad for the performance of the figure.
- In 87% of cases, there is a bearish exit.
- In 62% of cases, the objective of the figure is achieved.
- In 10% of cases, a pullback occurs on the support.
- 76% of descending flags occur in the upper 1/3 of the annual range.