Bearish Pennant Pattern
Learn to recognize and trade a bearish pennant pattern through interactive charts.
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What is a bearish pennant pattern?
A bearish pennant, also called bear pennant, occurs when the price retraces part of its prior fall, before resuming its downtrend.
- EURUSD Bearish Pennant forex
- International Airlines Group (IAG) Bearish Pennant stocks
- Starbucks (SBUX) Bearish Pennant stocks
Bearish pennant duration
A pennant is a short-term pattern, which tends to occur over 1 to 3 weeks, as the price consolidates.
Bearish pennant characteristics
This pattern is similar to a bearish flag, except that trendlines converge towards one another in a triangular manner.
- The pennant pattern rests on a pole, which represents a strong prior downward move in price. Remember that a pennant pattern cannot occur without a pole.
- The pennant consists of two trendlines that converge towards one another, in a triangular manner.
- A pennant typically retraces less than a flag. A deeper retracement could be indicative of a symmetrical triangle.
Trading volumes generally rise as prices fall and disorderly selling takes place. You should expect volumes to remain subdued as the pennant forms. Lower volumes suggest that buyers lack conviction. This lays the ground for the downtrend to resume.
Bearish pennant trading tips
Look for the price to break below the lower trendline to confirm the bearish pennant pattern, before going short. The break below the trendline that provided support should happen on rising volume.
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