Forex Chart Formation Patterns_6. Learn Forex Bullish and Bearish Pennant Formation

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.