The pennant trading pattern, its difference from symmetrical pattern

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Good to share my little trading knowledge with you people today.
In today’s post, I’ll talk about the about topic started above.

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When trading any pairs (either foreign exchange, stock, indexes or cryptocurrency), a pennant is another type of pattern that a trader can use to spot continuous trend after a consolidation or In technical analysis, a pennant is regarded as a breakout that occurs after a consolidation of the price.

Types of pennant

Basically, the two types of pennant are;

• Bearish pennant
• Bullish pennant

Bullish Pennant: This pennant occurs in a bullish trend. During this period, sellers step in to pull the trend downward but after battling for some duration, the bullish trend takeover again and it continues in the direction.
A bullish pennant consist of four major parts; a bullish flagpole, a consolidation, a pennant and a bullish breakout.

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Bearish pennant: It is an inverse of bullish pennant. Its consist of a bearish flagpole, consolidation, pennant and breakout as well.

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The pennant trading pattern is not much different from symmetrical triangle pattern. In fact, many novice always confuse when they want to differentiate between them. It’s easy to spot the difference between pennant and flag pattern than symmetrical pattern.

The difference between is that;

• In a symmetrical pattern, the price can breakout either downward or upward but in pennant pattern, the trend continues in the same direction thus making it a continuation pattern.

• A pennant pattern have a flagpole before it consolidation and hence, build another straight pole after it breakout in the same trend. This straight breakout pole is as a result of heavy trading volume after bull have taken over the trend again.

• A pennant pattern breakout at the apex which gives it a sharp tip. Apex means the point that the converge. In symmetrical pattern, the breakout can is not at the apex therefore giving it a flat top.

Common mistakes that should be avoid when trading pennant

The most important mistake that people make is believing that a pennant can change direction of the trend after a breakout. Forever, a pennant remains a continuation pattern.

Always waiting for a breakout with patience. Remember that the breakout must be at the apex.

Disclaimer

This topic is a tip of an iceberg in trading so it is not advisable to start trading immediately after reading. If you want to give a try, please kindly use a demo account because trading requires much experience both in technical and fundamental analysis.


In addition to my personal skills, I read through the following sites;
investopedia

investopedia.com/terms/p/pennant

tradingwithrayner

Thanks for reading