Oh, I am bringing the third lesson of the series, and today we will talk about a pattern that appears quite often on cryptocurrency charts: the bear flag. This is a classic continuation pattern of a downtrend, and understanding how it works can make a big difference when trading.

Basically, here’s what happens. Sellers are in full control, and the price drops sharply, falling freely to form the flagpole of that flag. Then comes a pause, buyers jump in with that FOMO expecting a reversal, the price rises a bit, and moves sideways in parallel. It’s at this moment that the flag itself forms. As you observe, you’ll notice the amplitude decreases and the volume drops, signaling that the decline should continue soon.

To properly identify it, you need to look at two parts. First, the pole: it’s that sharp, continuous decline, with long, decisive candles falling strongly. Then comes the flag: after that initial drop, the price rises slightly and moves in parallel or stays sideways. The amplitude gradually decreases, and the volume also drops, indicating weakness.

When you identify a bear flag, there are two main ways to trade it. The first is more aggressive: you go short as soon as the price breaks down below. The second is safer: you wait for the flag to break, let the price test that breakout point again, and then go short with more confidence. The stop loss is placed at the top of the flag, and if you want to be more protected, add a little above it.

For take profit, you can work with 1R, 2R, 3R, or measure according to the size of the flagpole and use that as a reference. All these methods are valid. You can also draw parallel lines and trade within them, usually managing to reverse 2 to 5 times if you know how to take advantage.

An important note: if the flag rises too much, above 50% of the length of the pole, this pattern becomes a false flag, and you should ignore it. When that happens, it means the bearish side lost control, and the bulls took over, so it makes no sense to trade it.

I took this example from the BTC chart on the M30 timeframe from October 28, 2025, and it worked well to illustrate how a bear flag forms in practice. If you have questions or suggestions to improve the content of this 100-day series, send them in. Don’t forget to interact and follow the upcoming lessons to truly master these patterns.