A Bear Flag pattern is a technical analysis pattern that signals a continuation of a downtrend. It typically forms after a sharp decline in price, which creates the "flagpole." Following this drop, the price action consolidates in a relatively narrow range, often moving slightly upward or sideways. This consolidation phase forms the "flag" portion of the pattern.

The Bear Flag pattern consists of two main components: the flagpole and the flag. The flagpole represents a steep, almost vertical, decline in price, indicating strong selling pressure. The flag appears as a small rectangle or parallelogram that slopes against the direction of the prevailing trend, characterized by a period of consolidation with lower trading volumes.

To identify a Bear Flag, traders look for a sharp price decline followed by a brief consolidation period. The consolidation phase should ideally retrace no more than 50% of the flagpole's height. The pattern is confirmed when the price breaks below the lower boundary of the flag with increased volume, signaling the resumption of the downtrend.

Traders often use the Bear Flag pattern to enter short positions, aiming to capitalize on the continued downward movement. The pattern is considered reliable when it occurs in the context of an existing downtrend and is accompanied by strong volume during the initial decline and the breakout.