The descending flag (bull flag) is a continuation figure. The flag is formed by two parallel bearish lines which form a rectangle. It is therefore oriented in the opposite direction of the trend that it consolidates. Unlike a bearish channel, this pattern is very short term and signals the need for buyers to pause.
The formation of the descending flag occurs in an uptrend. Most often, this pause occurs halfway through the movement.
The calculation of the target is done relative to the initial trend. We calculate the height of the entire upward movement preceding the formation of the descending flag and then we report this height to the last low 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 bullish 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 this figure.
- In 87% of cases, there is a bullish exit.
- In 62% of cases, the objective of the figure is achieved.
- In 10% of cases, a pullback occurs on the resistance.
- 76% of descending flags occur in the upper 1/3 of the annual range.