Scribd Logo
Upload

Welcome to Scribd!

  • 171 views

    Pennants PDF

    Uploaded by

    Ben Willmott
    Pennants are continuation patterns that occur after strong price moves and represent a period of consolidation before the trend continues. Bullish pennants form after upward moves and signal that prices will rise further after a brief pause. Bearish pennants happen after downward trends and indicate that prices will fall further once the pennant is broken. Traders watch for pennants and enter positions expecting the trend to resume in the original direction once the pennant is broken out of based on the size of the prior trend. Pennants can predict large trend reversals when they occur at the end of a trend.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Pennants PDF

    Uploaded by

    Ben Willmott
    171 views4 pages
    Pennants are continuation patterns that occur after strong price moves and represent a period of consolidation before the trend continues. Bullish pennants form after upward moves and signal that prices will rise further after a brief pause. Bearish pennants happen after downward trends and indicate that prices will fall further once the pennant is broken. Traders watch for pennants and enter positions expecting the trend to resume in the original direction once the pennant is broken out of based on the size of the prior trend. Pennants can predict large trend reversals when they occur at the end of a trend.

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Pennants are continuation patterns that occur after strong price moves and represent a period of consolidation before the trend continues. Bullish pennants form after upward moves and signal that prices will rise further after a brief pause. Bearish pennants happen after downward trends and indicate that prices will fall further once the pennant is broken. Traders watch for pennants and enter positions expecting the trend to resume in the original direction once the pennant is broken out of based on the size of the prior trend. Pennants can predict large trend reversals when they occur at the end of a trend.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    171 views4 pages

    Pennants PDF

    Uploaded by

    Ben Willmott
    Pennants are continuation patterns that occur after strong price moves and represent a period of consolidation before the trend continues. Bullish pennants form after upward moves and signal that prices will rise further after a brief pause. Bearish pennants happen after downward trends and indicate that prices will fall further once the pennant is broken. Traders watch for pennants and enter positions expecting the trend to resume in the original direction once the pennant is broken out of based on the size of the prior trend. Pennants can predict large trend reversals when they occur at the end of a trend.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    Pennants

    After strong moves, the continuation chart patterns known as pennants can occur
    as price consolidates before moving on in the direction of the original strong move. A
    pennant forms a small triangle that is usually symmetrical (close to), and in strong upward
    or downward moves this pennant represents buyers or sellers catching their breath so to
    say, before reloading and pushing price even further. Traders will see the consolidation
    and usually jump in themselves, causing price to spring out of the pennant.

    Bullish Pennants
    Bullish pennants form after big upward moves/ almost vertical up-trends and signal
    the bulls are about to get at it again after a short pause of consolidation. When they do
    enter again, expect price to move convincingly away from the pennant. The big move
    before the pennant is often referred to as the flagpole, and we should expect price to move
    by this same distance once it breaks out (as shown by the blue arrows in the 1H Dollar
    index chart below), making it a good target. It would be safe to put the SL below the start
    of the lower trend line that makes up the triangle, which would’ve made a decent 100 pips.

    Page 1
    Of course, price doesn’t just have to stop when it reaches the height of it’s original
    structure. If you catch a pennant at the start of a reversal you could be sat there laughing
    to yourself as you watch it pull further and further away.

    Here we see another bullish pennant ^, but this time it occurs immediately after the
    end of a downtrend. Price comfortably breaks out of the pennant and hits the short term
    target (top of the 2nd blue arrow) which offered a good RR. However if we zoom out a bit
    and take a look……

    Obviously the Presidential election caused the big spike down, but we can see that
    the pennant straight after a downtrend signalled a huge reversal that is still going to this
    day.
    Page 2
    Bearish Pennants
    As you can guess, a bearish pennant is the same as a bullish one except in
    reverse. So a bearish pennant will occur after big downward moves/ almost vertical down-
    trends, and it signals that the bears are going to get back on board after hibernating
    (pause in the move as consolidation). So we still have the flagpole, just this time it will be
    going downwards before the symmetrical triangle occurs, and as before we should expect
    price to move the same height of the flagpole after breaking the pennant to the downside.

    In this example, we actually see a fakeout initially as price breaks to the upside of
    the bearish pennant (the opposite to what we are expecting). But then you can see price
    comes back inside the pennant and the bodies close inside it, reclaiming the pennant. This
    occurs just before a big drop as price breaks out to the downside. The blue arrows used
    are the height of the flagpole and are shown from where the breakout occurs, showing
    price comfortably hits the initial target. If you look for an area of support near where the
    arrow ends, it should give you a better idea of where price is heading.

    Page 3
    This image shows a zoomed out perspective of the same pennant. Here we can
    see I had a key level (1st quarter low) highlighted where there would be a lot of orders
    resting due to the significance of the level. A good time to enter this particular trade would
    have been after the 2 bodies closed inside the pennant with your stop loss above the
    fakeout as for this setup to work we don’t want it going back up there. Never randomly pick
    numbers as your targets, you should always have a reason for your original targets.

    #PFGTrading

    Page 4

    You might also like