A pennant pattern (flag pattern) may be a breakout chart pattern that follows the most price trend and features a rectangular shape resembling a flag. It suggests if the trend would continue for an extended time-frame or would be reversed during a swift motion.
The price action on any financial product is split into bullish and bearish sentiments. Effectively, the 2 words signal a bullish and bearish market.
Bullish Pennant Pattern
A bullish pennant formation provides clues for a price continuation to the upside following the breakout. The confirmation of the breakout occurs upon a candle close above the resistance line of pennant pattern. When this happens , we expect price to maneuver higher, often with a target that's like the length of the prior impulsive move, also mentioned because the flagpole.
Bearish Pennant Pattern
A bearish pennant structure indicates selling pressure on the worth following the breakout. The confirmation of a bearish pennant pattern comes after a breakout and shut below the support line of the formation. When this happens, we might anticipate prices to maneuver lower, with the target price that's an equivalent because the distance traveled within the prior flagpole.
Bearish Pennants and Bullish Pennant are inversely proportional to every other. Pennants formed by prolonging patterns that appear in rigid droops are referred to as Bearish Pennants. Bearish Pennants always commence from a flagpole – a saturated price drop, chased by an opportunity during descending movement.