Pennant Pattern – Bearish and Bullish pennant
Thirty Sixth session of Forex Training
Welcome back to Forex professional training in financial markets.
Pennant, Bearish pennant and Bullish pennant will be studied in this session.
Pennant Pattern
Pennant is a combination of a Flag and a Triangle pattern which has a continuation manner.
It would be mandatory to study sessions on Flag and Triangle to fully understand Pennant pattern details.
Pennant has a shaft like Flag pattern, while rectangular shape of a Flag is replaced with a triangle shape.
Bearish Pennant
Bearish Pennant, shown on the right graph, is formed on a downward trend which may have level or gradient support and resistance lines.
Resistance line never has a downward slope, while a slope of the support line never forms upwards.
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Bullish Pennant
Bullish Pennant, shown on the left graph, is formed on an upward trend which may have level or gradient support and resistance lines.
Resistance line never has upward slope while slope of support line never forms downwards.
H Line
Height is the vertical distance between the starting point of a Pennant pole to the peak of the first wave on a Bullish Pennant or the valley of the first wave on a Bearish Pennant.
TP price would be H or H/2 higher than the Breakpoint in a Bullish type and lower than the Breakout point in a Bearish model.
In a Bullish type, SL price is lower than the last valley until 61.8% of Fibonacci Level, while SL price in a Bearish mode is above the last peak until 61.8% of Fibonacci Level.
Several examples can be reviewed on MT4 for further practice.
On a daily timeframe of Gold chart, a Triangle pattern has been formed and the market price is assumed to decline.
TP price can be specified by drawing a Fibonacci on the first swing, from its peak to the valley.
A Trader can draw a Pole on the trend, thus a Bearish pattern can be formed.
TP price, around 500 pips, can be calculated by relocating the H Trendline to the Breakout point.
If a trader considers a Triangle pattern, then TP would be less than H amount in a Pennant pattern.
Pennant patterns are formed regularly on Gold symbols.
Another pattern on a downward trend, if a trader considers a Pennant on this example, then TP would pass H/2 pips.
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On a longer timeframe like monthly timespan, there are numerous Pennant patterns. The Bullish pattern was formed on an upward trend.
A Triangle pattern shows us around 2000 pips TP price over the Breakout point, while a Pennant pattern indicates 3222 pips higher than the Breakout spot.
Another Bullish Pennant pattern on an uptrend can be detected.
TP price is determined by using H Trendline which should be relocated to the Breakout point.
TP to SL ratio is considerably high on this pattern. For instance, SL price was below the last valley and 61.8% of Fibonacci level.
There is another significant Level on 50% of Fibonacci level that can be used to specify SL price in this example.
That concludes this session, until next time and another session take care.