The Capital
Published in

The Capital

Bear Flag Patterns In Crypto

Easy to spot with a trained eye but complex to a novice

Spotting the right trend to an advantage is what defines making it big in trading. But whether these trends are bullish or bearish, it is a challenge to ride on rightly on the developing patterns. Sometimes corrections will occur to allow more investors to participate. If that is so, participating buyers will extend the bull run. If selling traders dominate, expect a bear run to stay. Continuing patterns are a trader’s guide in spotting trend extensions in bull or bear runs. They are known in the trading circle as bull or bear flags.

The Bear Flag

When a downward trend is extended by a short upward consolidation and a continuing downward trend, it is technically called a bear flag. The short upward consolidation usually consists of short up and down patterns called “flag.” This is followed by a strong downward move known as “flagpole.”

In spotting the formation of a bear flag, first, there must be the initial decline which is the long steep or sloping downward pattern to identify the flagpole. It means a possible bear flag is about to happen.

Second, a consolidation happens when the pattern stops and moves upward by retracing a part of the initial move which must be within 38%. If it reaches 50%, it may not be a bear flag. Afterward, the pattern goes down again to lower lows in the direction of the downtrend.

And thirdly, the next decline becomes the profit target. The trading entrance can be at the top of the flag or on the breakout below the low of the lower channel. Ideal prices can be located at the patterns breaking lower with lengths equaling the size of the flagpole.

All these components make a bear flag a highly reliable price pattern and can be applied in all types of financial markets including the cryptocurrency market. It may be easy to identify among professional traders but may be complicated for the novices.

Conclusion

To know when to trade using the bear flag, the flag can be seen trading upwards in a channel then moves downward with consolidating lower highs and lower lows. One assisting indicator that traders use is the Fibonacci retracement indicator that identifies entry levels where the flag can turn and go on the current trend.

Sometimes traders are deceived by a bear flag pattern thought of as a bullish breakout. The difference is that bear flag patterns gradually rise in price while on a downward trend. Bullish breakouts, meanwhile, manifest a series of sharp moves toward the uptrend. A Donchian channel is a tool that can assist traders when to spot such potential breakouts.

Wallex is a FinTech company with no-nonsense defi solutions to your digital asset management needs such as Trust, Custody, and Exchange. We employ AML and KYC procedures to keep our transactions safe and secure. Our friendly Wallex Team will be there for you for any clarification as you decide to make us your trusted partners in securing and increasing your funds on top of the digital landscape. https://www.wallexcustody.com

--

--

--

A publishing platform for professionals in business, finance, and tech

Recommended from Medium

The Crypto Time Traveler

Bitcoin’s Plan B for Climate Change

Staking ADX & DeFi: Everything You Need to Know

A Brief History of NFTs: Where Do They Come From and Where Are They Going?

Announces Public Token Launch on Pancake Swap

Never Tweet: How Elon Musk Is Ruining the Promise of Crypto

Why build on the Cardano blockchain

YFDAI — The balance of compliancy and decentralization.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Wallex Trust & Custody

Wallex Trust & Custody

WallexTrust is a technology-driven financial trust service providing financial solutions for the new digital economy.

More from Medium

How High Will Bitcoin Go?

Tether Is The Reason Why Bitcoin Could Fail

Is Bitcoin a Lifeboat To Save Us From Financial Collapse? [VIDEO]

Crypto: A Paradigm shift in money