July 25, 2020

Bullish Pennant Pattern

Bullish Pennant Pattern

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A bullish pennant chart pattern can be a powerful bullish chart pattern that is found during strong bull markets that is very similar to the bull flag. They are more rare than a bull flag. The price compression in the pennant can lead to explosive moves once there is a breakout. Many times these patterns are formed in leading growth stocks that have gone parabolic.

  • The bull pennant is a continuation pattern of the previous uptrend. 
  • A pennant pattern is very similar to a flag pattern except a flag is rectangular and descending and a pennant is triangular.
  • A bull pennant chart pattern occurs after an uptrend out of a previous price base. 
  • The ‘pole’ is represented by the previous uptrend in price before the consolidation. 
  • The symmetrical triangle of the pennant must have overall lower highs and higher lows that run parallel and converge toward each other. 
  • The pennant is generally neutral in direction.
  • The signal of the end of the pennant pattern and the beginning of a new potential up trend is when the descending upper trend line is broken with a move upwards in price. 
  • This pattern is thought to be the consolidation of the uptrend.  
  • Traditionally the move out of the pennant is thought to be potentially as big in magnitude as the uptrend before the pennant begins. 
  • A breakout of the pennant with higher than normal volume increases the chance of a continuation of the uptrend. 
  • A stop loss can be set at the lower ascending trend line in the pennant.

Bullish Pennant Pattern

Chart courtesy of TrendSpider.com