Lesson 6: Learn Forex Bullish and Bearish Pennant Formation When there is a continued bullish trend, it is known as a bullish pennant. It is very similar to the bull flag formation and it consists of a strong move upwards as a flag pole - and a consolidation phase known as a pennant. The pennant is formed when the support and resistance level lines converge and leave the price no choice but to break out. Check this though - for it to be a genuine bullish pennant, there can be no more than 30 sessions forming it. In this chart you can see the price has had the strong up move but as the market needs to adjust to the new higher prices, it goes into the consolidation phase. As the resistance line is sloping lower and the support level is sloping higher, the breakout is inevitable. So, when to enter the market? You enter after an upside breakout and target the height of the flagpole measured from the pennant base. Remember - if the price is broken to the downside, the pattern is not to be traded - as this is a bullish pattern. Similarly, the bearish pennant is the complete opposite and it is generally observed when there is a strong downward pulling force. It is best recommended that you enter the market when there is a break towards the downside and you should target the flagpole height as measured from the bottom to the top of the pennant.