Bearish Flag Pattern Analyze - Horizontal Resistance

Horizontal Resistance is a recognized bearish continuation pattern in technical analysis, often emerging during corrections within a broader downtrend or as resistance against uptrends following market bottoms.

• Downtrend Identification: The market exhibits a downtrend (Segment 1, Picture A), reaching a low (Point B), then rebounds to form a high (Point C).
• Resistance Formation: After setting a new low (Point D), the market rebounds to a horizontal level (Dotted Line G, Picture A), which previously acted as the starting point for the decline to the new low.

• Entry Point: Optimal for initiating a bearish trade when the price nears the established horizontal resistance (Point C, Picture B), expecting trend continuation of the downtrend.
• Risk Management: A stop loss should be positioned just above this resistance line (Line A, Picture B) to manage risk, offering a favorable risk-reward ratio if the downtrend resumes.

Alert Types. YardCharts provides two alert levels:

• 10% Alert: Triggered when the price retraces 90% of the distance from the recent low to the previous resistance level (Line F, Picture C).
  
• 5% Alert: Activated when the price retraces 95% of the same distance, offering a closer entry with potentially fewer but more precise signals.
  

Here are 5 instances YardCharts has identified where the Horizontal Resistance pattern led to successful trades, with the stock price decreasing at least threefold the distance to the stop loss from the entry point without triggering the stop loss.

Note: All visual references (points, lines, segments) are depicted as they would appear in YardCharts' Trading Alarms section.