A bearish continuation patterns occurs when a stock in a downtrend consolidates for sometime before continuing on it's downtrend. A stock after, it's been on a downtrend, usually moves sideways or consolidates for while before it continues on it's downtrend. The following are usually very recognizable patterns.

Descending Triangle.

This is usually a fairly safe pattern to trade. Average trading volume generally decreases as the pattern is formed. To calculate the predicted target price, subtract the price of the lower trendline from the upper one from the start of the formation. Take this result and subtract it from the lower trend line. This is the predicted target price. A pullback after a breakout often occurs before the price of the stock declines to it's predicted target price. The duration of this pattern is usually about 3 months.

Symetrical Triangle - In a Downtrend.

A symmetrical triangle can breakout in either direction. If it breaks out to the upside, it might be a reversal pattern. Since this section is about bearish continuation patterns, we'll consider breaking out to the downside. To compute the predicted target price, subtract the highest price from the lowest price in the pattern. Take this result and subtract it form the lowest price in the pattern. This is the predicted target price. A pullback after a breakout often occurs before the price of the stock declines to it's predicted target price. Trading volume in this pattern diminishes before a breakout. The duration of this pattern is usually about 3 months.

Flag.

This is a short term consolidation pattern. The duration of this pattern is only from a few days to a few weeks. It should never be more. As with most consolidation patterns, volume usually diminishes as the pattern is forming. To calculate the predicted target, take the difference between the start of the downtrend and the formation. Prices should move at least this amount below the formation. As in every pattern, always wait for a breakout first.

Pennant.

This is a short term consolidation pattern much like the flag pattern. The duration of this pattern is only from a few days to a few weeks. It should never be more. As with most consolidation patterns, volume usually diminishes as the pattern is forming. To calculate the predicted target, take the difference between the start of the downtrend and the formation. Prices should move at least this amount below the formation. As in every pattern, always wait for a breakout first.

Rectangle.

The duration of this pattern is usually about three months. Prices can break out in either direction. Since we are considering bearish continuation patterns in this section, we'll consider a break out to the downside. To calculation the predict target price, take the difference between the top trend line and bottom trend line. Take this result and subtract it from the bottom line. This is the predicted target price. A pullback after a breakout very often occurs before the price of the stock declines to it's predicted target price. As with most consolidation patterns, volume usually diminishes as the pattern is forming.