Flags in Downward Movements

The Flag continuation pattern in a declining price trend is, of course, simply the
upside-down development of the pictures we have just analyzed in ascending
trends. The mast is formed first by a very rapid price mark-down; the flag is
normally
tilted slightly upward; volume tends to decline during its formation and then
picks up sharply as the price breaks the lower boundary; and then a further rapid
decline ensues.
For a typical example, refer to the 1931 chart of Columbian Carbon (Fig. VI.17).
After a sharp break from the February high of 1111/2 down to 93 in two weeks, a
wide
Flag formed during the first three weeks of March, and broke out into another rapid
decline on March 24. It is interesting to note, although it has no special significance,
that this Flag developed at the same time as the Rectangle continuation pattern
previously
illustrated in Electric Auto-Lite.