Pennant

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    What is a pennant?

    pennant is a triangular continuation pattern formed after a strong price movement. It is used in technical analysis to help make trading decisions.

    How do pennant patterns form?

    After a sharp move in a particular direction, there is neither significant buying nor selling and the market price is temporarily held in a consolidation pattern.

    Because of this indecision, a more or less symmetrical triangle is formed. This is a pennant pattern.

    The price eventually breaks out of this pattern, continuing the original trend.

    The bullish pennant and bearish pennant

    bullish pennant forms during an uptrend and indicates that the price may continue to go up. It gives you the chance to make a long trade, hopefully profiting from a second big price rise.

    The chart below shows an example of a bullish pennant:

    bullish pennant tradipedia

    bearish pennant is the exact opposite of a bullish pennant. It forms during a downtrend and indicates that the price may continue to go down. A bearish pennant gives you the chance to make a short trade, hopefully profiting from a second big fall in price.

    The chart below shows an example of a bearish pennant.

    bearish pennant tradipedia