pennant trading strategy: Pennant-formation

pennant trading strategy: Pennant-formation


Two trend lines form simultaneously, one slanting downward signifying resistance with the other slanting upward signifying support. Therefore, when reviewing flag and pennant patterns you can look to see how the price action is trending relative to the Ichimoku Cloud. Bearish pennants and bullish pennants can indicate that major price action is on the cards – so understanding them is crucial for any technical trader. Here’s an introduction to how pennants work, and how to trade them. A symmetrical triangle is a chart pattern characterized by two converging trendlines connecting a series of sequential peaks and troughs.


Pennant International “massive progress being made by the … – DirectorsTalk Interviews

Pennant International “massive progress being made by the ….

Posted: Tue, 21 Feb 2023 08:00:00 GMT [source]

As you can see on the 4h timeframe the price created a double top of 0.29$. Resistance occurs when there is notable selling of the asset at a given level, so the price has previously been unable to move through this point. Higher trading volumes should confirm that there are indeed serious, possibly institutional buyers behind the sudden price increase. The intersecting candlestick MUST close below the upward trendline.

Jumping on this bandwagon reduces the likelihood of the trade going against you. In the above example, we have a flag pattern, which had an impulsive move higher. Then the stock began to trend sideways for a few hours on the 5-minute chart.

Tools to Spot Trend Reversals in Stocks

Bearish Pennant PatternIn both bullish and bearish Pennants, profit-targets can be placed by measuring the first half of the flagpole’s distance. The calculated distance can then be applied after the breakout candle. The bull pennant pattern is not a trend reversal pattern but a trend continuation pattern. The buy signal in the above chart points to the position where the price action forms a bullish breakout through the upper level of the Pennant. A pennant pattern can be bullish or bearish depending on the direction of the first flagpole, shown below. Like pennants, flags also begin with a very strong initial move, followed by a consolidation area.

  • Candlestick formations and their patterns are relied on by all kinds of market participants trading various assets.
  • As with all trading strategies, it’s crucial to have a stop-loss order in place should the breakout prove to be a false dawn.
  • After rocketing from the $80 range up through $133, the stock began to stall and consolidate.

Our first profit target is the amount risked, i.e. 25% of the flagpoles height. As soon as it is reached, we take out half of our position and we will move our stop up to the entry point. This leaves us with a profit of 25% of the flagpoles height on the first portion of the trade, while the remainder may drop to breakeven in the worst case scenario. You see above that the “pole” if you want to call it that had a strong upward movement .

Volume in Trading – Explanation and Interpretation

But consolidation can’t last forever, and without enough bullish sentiment to recover, the market turns bearish once more. Once it moves outside of its support line, any sellers who have been holding back jump on – sending it to new lows. The bullish pennant pattern can occur over lots of different time frames.

risk management

The bullish pennant signifies a pause in the price movement in an uptrend; the price is expected to continue rising when it breaks above the upper border of the pennant. The breakout to the side of the trend must be accompanied by a huge volume. Usually, when the trend resumes, the price movement tends to be rapid, just like the one that precedes the flag formation. So, it is important to notice the flag pattern in time and position to take advantage of it. Traders will typically set a limit short order at the lower trendline.

b. Bearish Pennant

After enough pennant trading strategy, the price breaches through the upper trend line of the pennant pattern and makes a new higher high. In Forex market, there are a countless number of candlestick patterns. Pennant pattern is one of the candlestick patterns that is extensively used by traders to make trading decisions. When the pennant pattern is combined with logic and other technical factors, it works phenomenally. A symmetrical triangle chart pattern represents a period of consolidation before the price is forced to breakout or breakdown. will not be held liable for the loss of money or any damage caused from relying on the information on this site. Trading forex, stocks and commodities on margin carries a high level of risk and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. For the screenshot above we have used an hourly chart of the GBP/USD cross.

Forex Trading Using the Slow Stochastic Oscillator

Day traders look for them on second or minute charts, while longer-term traders spot ones that arise over weeks or even months. For example, traders may watch for relative strength index levels to moderate during the consolidation phase and reach oversold levels, which opens the door for a potential move higher. Or, the consolidation may occur near trendline resistance levels, where a breakout could create a new support level. Pennants are continuation patterns where a period of consolidation is followed by a breakout used in technical analysis. Profit targets are typically aligned according to risk/reward ratios.

Despite Fast-paced Momentum, The Pennant Group, Inc. (PNTG) Is … – Nasdaq

Despite Fast-paced Momentum, The Pennant Group, Inc. (PNTG) Is ….

Posted: Wed, 01 Mar 2023 13:50:00 GMT [source]

Both the pennant and flag patterns are among the most reliable continuation patterns used by price action traders, and they tend to form in similar situations in an existing trend. It is considered a continuation pattern, as it signifies the market taking a breather before resuming its movement. They use it to identify the possible continuation of a previous trend. The pennant pattern, which is the consolidation period between two converging trend lines, forms the shape of a pennant. If the price breaks below the pennant, I would not enter a trade based off of the rules of this strategy.

Trading Trend Line Bounces

It is said to be the most powerful state of the market.Technically, a trending market is the one that progresses by making higher highs or lower lows. The trader places an order at the point when the price breaks out from the sideways trend and moves higher. In this case, the trader places an order at around $2.95 and prepares to go long. The price increase from the starting price and the Take Profit price is $0.85. A breakdown from the lower trendline marks the start of a new bearish trend, while a breakout from the upper trendline indicates the start of a new bullish trend.

The Flag is angled contrary to the trend impulse that creates the pole. In this article, I will teach you how to trade the Flag pattern. Tap on the E-Book Cover Below to get your copy of this Free strategy today. If you do not agree with any term or provision of our Terms and Conditions you should not use our Site, Services, Content or Information. Please be advised that your continued use of the Site, Services, Content, or Information provided shall indicate your consent and agreement to our Terms and Conditions.

If you are not familiar with Fibonacci, 23.6% is part of the Fibonacci series and is in the default series for most trading platforms including Tradingsim. In this article, I plan to challenge the norm and coming up with some creative ways you can start to trade these patterns. Not sure if you’re ready to commit real capital to your pennant strategy?

The price is creating a pennant on the key level after a clear rejection from the 8.8$ area. And retested the 0.618 Fibonacci level as new resistance How to approach? IF the price is going to have a breakout from the pennant and retest the key level as new resistance, According to Plancton’s strategy , we can set a nice order ––––– Keep in mind. Sometimes, the peaks and bottoms may not be so clear when this bearish pennant chart is forming. Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.

  • will not be held liable for the loss of money or any damage caused from relying on the information on this site.
  • In general, when people say “the stock market,” they mean the S&P 500 index.
  • The flagpole is an initial strong movement to the upside or downside.
  • You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
  • Deep retracements beyond that invalidate the pattern, signal divergence, and a possible shift in price trend, even if only temporary.

The identifies a bearish pennant wherein there is a consolidation period after a bearish run. The trader takes note of the starting price of the bearish run, which is around $64,300. You will find that most chart patterns are more reliable, have more traders interest, on the higher time frames. You don’t need a Forex indicator but you just need to develop the ability to spot this pattern. The only way to get good at spotting this pattern is through chart time.


A Pennant is characterized by the continuation of the upward or downward trend. Founded in 2013, Trading Pedia aims at providing its readers accurate and actual financial news coverage. Our website is focused on major segments in financial markets – stocks, currencies and commodities, and interactive in-depth explanation of key economic events and indicators. The parabolic showed us five consecutive crosses above the candles. This could be a sign that this upward move is over and you should consider exiting like so many other traders are doing. As you can see above, this trade moved a total of 70 pips on the second move where we entered the trade based off of the strategy.

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