🎉A pennant is a continuation pattern that is used by traders to predict upcoming market movements. This pattern is similar to a triangle, but there are some important differences between the two that you need to be aware of.
🪩A pennant pattern is a continuation figure that forms when a significant upward or downward movement is recorded, followed by a short-term consolidation, and then the movement continues in the original direction. The figure looks like a small symmetrical triangle consisting of many candles. Depending on the direction of the trend, the pennant pattern can be either bearish or bullish.
♥️Features of the pennant pattern
Looking at the pennant continuation pattern, the following features can be noted:
- Flagpole: The formation of a pennant always begins with a flagpole, which is what distinguishes this figure from similar patterns (such as a symmetrical triangle). The flagpole is the initial strong move that precedes the appearance of a symmetrical triangle on the chart;
- Breakout levels: in fact, there are two breakout points in the pattern; one is at the end of the flagpole, and the other (one might say, the main one) is at the end of the consolidation period, after which the upward or downward trend continues;
- The pennant itself: The pennant is a triangular figure formed during market consolidation between the flagpole and the main breakout. Two converging trend lines form a triangle - a pennant.
🐂Bull Pennant
A bullish pennant is a continuation candlestick pattern that appears in strong uptrends. The pennant is formed by an ascending flagpole, a period of consolidation, a subsequent breakout, and a continuation of the uptrend. Traders look for a bullish breakout above resistance to take advantage of renewed bullish momentum and enter a profitable trade.