What is downward flag pattern?

A downward flag pattern is a chart pattern that is commonly used in technical analysis to identify a potential downtrend. It is formed by a steep downward price move (the "flagpole"), followed by a period of consolidation in which the price moves horizontally or slightly downward (the "flag"). The pattern is thought to be a bearish reversal pattern, as it indicates that the security's price may be losing momentum and may be unable to continue its downward trend.

The downward flag pattern is typically considered a bearish reversal pattern because it follows a steep downward price move (the flagpole) and is thought to indicate that the security's price may be losing momentum and may be unable to continue its downward trend. If the price breaks through the bottom of the flag and continues to fall, it may confirm a downtrend.

It is important to note that the downward flag pattern is not a guarantee that the price of a security will fall. It is simply a pattern that may suggest a potential trend reversal and should be used in conjunction with other technical and fundamental analysis tools to confirm a sell signal. In addition, downward flag patterns can be subject to interpretation and may be influenced by the biases and expectations of the analyst. As a result, different analysts may come to different conclusions about the same data.