Bullish Pennant Pattern

What is a Bullish pennant pattern?

A bullish pennant, also called bull pennant, marks a consolidation after a sharp move up in price. This pattern occurs when the price moves downwards over several weeks, before resuming its uptrend.

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Duration

A pennant is a short-term pattern, which tends to occur over 1 to 3 weeks, as the price consolidates.

Characteristics

This pattern is similar to a bullish flag, except that trendlines converge towards one another in a triangular manner.

1. The pennant pattern rests on a pole, which represents a strong prior upward move in price. Remember that a pennant pattern cannot occur without a pole.
2. The pennant consists of two trendlines that converge towards one another, in a triangular manner.
3. A pennant typically retraces less than a flag. A deeper retracement could be indicative of a symmetrical triangle.

Trading volumes

Trading volumes should rise as the pole forms, in order to provide legitimacy to the advance. Volumes should fall as the pennant forms. This indicates that selling pressure is dwindling, and lays the ground for a resumption of the uptrend.

Bullish pennant trading tips

Look for the price to breakout from the upper trendline to confirm the bullish pennant pattern, before going long. The breakout should happen on rising volume. The greater the volume, the more likely it is that the trend will continue.

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