A bear pennant pattern consists of a larger bullish candlestick which forms the flag pole. It’s then followed by several smaller consolidation candles that form a pennant. You will see many bear pennant patterns that consolidate near resistance levels then when it rejects, price action breaks down out of the apex of the pennant.

Bear pennants are bearish continuation patterns. That means as a trader, you are looking for these are price movements you are expecting to show that price wants to continue to decline.

You want to look for bear pennant patterns to appear in strong downtrends or even newly formed downtrends. Typically after a major bearish breakdown (Like a daily head and shoulders pattern for example).

They tend to be shorter term continuation patterns.

The bearish candlesticks that form the pole followed by a consolidation period before resuming the fall downwards. Bear pennants are similar to bear flags.

They both have flag poles and consolidation forming the flag. You might hear an experience trader reference one that looks like a flag or a pennant. They are both similar in shape and easy to mix up, so don’t feel silly if you call it one and it could look like the other. Toe-may-toe or Toe-mah-toe as they say.

The pennant is more triangular in its consolidation phase, while the flag is more rectangular in its phase. They both tell the same story though.

Basics of Bear Pennants

Bear pennant chart pattern has it’s trend lines come together in a point during consolidation. Hence the name pennant. If you’re into sports your team probably sells pennants with it’s name and logo on it.

The pennants in the stock market have the same look. They start wide and come to a point. There is a big push in volume forming the flagpole.

Ideally the flag pole is long and strong and accompanied by some strong selling volume to confirm the move down. The stronger the selling volume, the better. Check your volume bars people!

When bear pennants are forming, the sellers are in control. You know, the bears. The bears are on parade and control the momentum of the stock.

Consolidation that occurs is the the two sides fighting to regain control. That consolidation time forms many different candlesticks.

How to Trade Bear Pennant Patterns

• Watch for a bearish candlestick that forms a flag pole
• Look for several consolidation candles that form a pennant and hit resistance levels
• Once price breaks down out of the apex of the pennant take short entry
• Watch if price can break below low of flag pole
• Use candlestick close above midway of pennant as your stop