Bear Flag on Intraday DIA

Jan 17, 2008: 10:37 AM CST

Here is a quick example of a bear flag that has resolved nicely on the 5-minute intraday chart of the DIA (Dow Jones ETF):

This bear flag was classic in that it retraced into key resistance from the 20 and 50 period MAs.

The “lightning bolt down” or measured move terminated at virtually the exact projection point.

A second flag-style pattern is setting up currently, however it is quite rare that a market would set-up two consecutive bear flags, or that the ‘flag’ portion of a new set-up would be the measured move of the prior version.

(UPDATE: 12:35 EST)

We actually DID get a bear flag trade out of the most recent set-up I highlighted, which surprised me. I took profits a bit early on this recent trade, because I wasn’t sure we’d get the full measured move down.

Lesson: It’s better to follow the charts than try to second-guess the market.

Typically, you don’t get two simultaneous ‘ideal’ bear flags of this magnitude:

The market is full of tricks.

Nevertheless, it’s always great to annotate and study classic patterns that work as well as these.

2 Comments

2 Responses to “Bear Flag on Intraday DIA”

  1. gmarg Says:

    Nice Measured Move Down 🙂 First I was also a little bit confused but I take it. Great work.

  2. Corey Rosenbloom Says:

    Gmarg,

    Thank you for the comment.

    I took it too but now want more out of it! The signal and pattern was clear. I was just ‘afraid’ it wouldn’t complete its target. Lesson learned!