Pennant Pattern: Bearish and Bullish

The pennant pattern, also known as a flag pattern, is a price movement pattern that signals the possibility of a continuation of the trend. There are two types of pennant patterns: bearish pennant patterns and bullish pennant patterns. This article will explain both patterns, their trading strategies, and the differences between them and triangle patterns.

1. Bearish Pennant Pattern:

• Occurs after a strong downtrend, followed by a correction with the formation of a pin bar reversal or doji. The triangle pattern then forms, indicating consolidation. With the bearish sentiment still strong, the price then breaks the triangle's support line.
• Trading Strategy:

1. Sell entry can be made after the price breaks the triangle's support line.
2. Place stop-loss a few pips above the triangle's resistance line.
3. Target levels or take profit are determined based on the pip movement from the start of the downtrend to the completion of the correction (x).

2. Bullish Pennant Pattern:

• Occurs after a strong uptrend, followed by a correction and the formation of a triangle pattern as a sign of consolidation. With the bullish sentiment still strong, the price then breaks the triangle's resistance line.
• Trading Strategy:

1. Buy entry can be made after the price breaks the triangle's resistance line.
2. Place stop-loss a few pips below the triangle's support line.
3. Target levels or take profit are determined based on the pip movement from the start of the uptrend to the completion of the correction (x).

3. Differences from Triangle Patterns:

• Pennant patterns are always preceded by a flagpole, reflecting a strong trend movement before starting the correction and consolidation.
• Triangle patterns are usually not preceded by strong trend movements.
• The time period for pennant patterns is shorter, less than 30 candles, while triangle patterns have a time period of more than 30 candles.

It is important to note that pennant patterns are short-term consolidation patterns, and entry and exit points should be carefully considered. Good money management and understanding of market sentiment can increase the success of trading based on pennant patterns.

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