I'm not voicing for a way to retract my flag. I flagged inappropriately by misreading the question, but it would be convenient to, in some way, indicate to moderator "I misflagged, please ignore me and decline this."
In this question, Anna Lear states:
There's no way to retract a flag, but you can flag the answer again and explain the situation in the "other" textbox.
This appears to be outdated though. Jeff specifically says not to do this, and attempting to re-flag a post just gives you an error:
It appears you can't have multiple pending flags cast on a single post the same time. You have to wait until the previous one gets dismissed before you can cast another. So, what do we do now to indicate that our flag should be ignored?
I know there's already an "invalid flag" option built into the system in the 10k tools. Would it be possible to somehow modify that, or add an option next to still-pending flags in my summary to "mark as invalid" which will just add an "invalid flag" to the pending one already there? This way moderators don't have to read my flag and wonder what the hell I'm talking about.
I think this would be a fair compromise between not allowing you to indicate in any way that it was a bad flag and flat-out retracting the flag. Not indicating it at all, especially on a custom flag which may need some investigating, seems like a waste of moderator's time. Rather than spending a couple seconds dismissing it, they'll spend who knows how long figuring it out on their own. I also realize that retracting flags is probably way more work than necessary. But since there's already an "invalid flag" reason built in, allowing a user to flag throw an invalid flag at their own flag seems like it could more easily be implemented.
If not via the flagging summary, you could detect if the user has already flagged the post in question when they attempt to flag again, and display a different dialog such as "You already have a flag pending for this post - flag as invalid."
Note: This is mainly focused on custom flags, which 10k users can't see to cast their own invalid flags and aren't always as straight-forward when it comes to investigating them.