Bearish Pennant & Bullish Pennant

Pennants are usually flat symmetrical triangles that reflect a brief pause in trading. They form either during a big uptrend or a big downtrend, as support and resistance levels move closer to each other.

Both the Bearish Pennant and the Bullish Pennant indicate trend continuation.

Bearish Pennant Chart

A Bearish Pennant can be traced after steep downtrends. During such moments, the price consolidates for a bit as some traders close their positions while others join the trend.

Traders go short at the bottom of the Bearish Pennant, anticipating the price to fall further. Stop Loss Orders placed above the pennant can protect traders in case there is an opposite price movement.

Bullish Pennant Chart

A Bullish Pennant succeeds major uptrends, only to be followed by another upward price movement.

A good way to take advantage of this chart pattern is to go long right above the pennant, expecting the price to rise. A Stop Loss Order placed below the bottom of the pennant is definitely a good way to guard yourself in case the price moves in the opposite direction.

Did you know?

In terms of trading volume, the FX market is by far the largest market in the world.

Word of the day
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Pro Tip

Always have an exit strategy.

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