Bearish Flag Pattern Analyze - Top Reversal

01

Pattern Overview

It is a YC trend inversion bearish pattern that tends to form at market tops after an uptrend and a consolidation range.

  • Initial Uptrend: The market exhibits a clear upward trend before the reversal setup.
  • Trading Range: A pause forms a trading range.
  • False Breakout: The market appears to continue upward before failing.
  • Reversal: The market then reverses and confirms bearish control.
top-reversal-1
02

Formation

Wait for at least two valid bounces and a clean structure before planning entry.

  • Entry Point: Bearish entry is when the price closes below the lower limit of the trading range.
  • Velocity: The rise should be slower or equal to the speed of the subsequent decline.
03

Signal Confirmation

A bearish setup is confirmed after breakdown and controlled retest near the key level. Place stop loss above invalidation.

  • A stop loss should be set above the upper boundary of the trading range or above the recent high.
  • Pattern failure is indicated if price rises above the upper boundary again.
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04

Historical Performance

Historical cases show meaningful downside when confirmation and risk management are respected.

Some Examples

ISIS Pharmaceutical

ISIS Pharmaceutical