Bull Pennants

Bull Pennant

7 min read

Bull pennants are one of the most popular bullish patterns. They consist of either a large bullish candlestick or several smaller bullish candlesticks up forming the flag pole, followed by several smaller bearish candlesticks forming consolidation into a triangle, which forms the pennant. Look for price to move out of the pennant to confirm bullish breakout. 

A bull 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. any bull pennant patterns that consolidate near support levels then when support holds, price action breaks out of the apex of the pennant.

Bull pennants are continuation patterns that can be found on all charts; a short term continuation pattern.

It has a small consolidation period before resuming its move up or down. Bull pennants are similar to bull flags. Day traders in particular love the bull pennant pattern due to the fact it is one of the most popular patterns for long bias traders.

Both bull pennants and bull flags have a flag pole. The flag pole should have high volume creating the flag pole to give more credence to the strength of the pattern.

The pennant forms a triangle whereas the flag is more rectangular in shape; they both tell the same story. Bulls are in control and smashing through bears line of resistance.

People get excited when they see bull pennants or flags. It is important to keep emotions in check because the excitement can get to your head. And you don’t want to make a mistake.

We get these Japanese candlesticks patterns from a rice trader by the name of Homma. He realized even back then that emotions have a big impact on price. Whether greed or fear, traders will always be trading those emotions.

Bull Pennants

Bull pennant trading has converging trend lines during consolidation. The consolidation period is usually where I like to enter. Watch the level 2, time and sales, and volume bars on a stock chart.

Try to limit emotions when trading; try to trade systematically and robotically. Remember we, as traders, are trading against algos and HFT’s. It is important to think like a robot when it comes to trading.

So the pennant part is really a wedge part on top of the flag pole. The wedge moves together to form the pennant look after a flagpole has formed. The flagpole is typically bullish candlesticks whether made of one big one are a couple together.

Similarly the flagpole shows the large volume coming (if there isn’t large volume, the move is more suspect) in while the pennant has weakening volume hence the formation.

If focus on volume bars and trends, going to have a better time trading bull pennants. Speaking about trading, it’s all about the battle between buyers (bulls) and sellers (bears). This pennant pattern is bullish. The buyers are in control.

Hence consolidation that occurs in this trend is the tug of war between the two sides. Notice the indecision candles like doji candlesticks or dragonfly doji candlesticks maybe even hammer candlesticks inside the consolidation period. 

An area to keep on watch for a possible entry would be to enter inside the pennant part (wedge part) and entering near or at 9EMA on some time frame. The 9 EMA is one of my favorite moving averages; it is also known as the tradeline.

BA Bull Pennant

Technical Analysis

Traders know how important candlesticks are to technical analysis; cannot have the simple moving average or VWAP without them.

Candlesticks are the first line of defense when trading. Think of candlesticks as an early warning system to what price action may do.

With that being said, technical analysis and candlesticks patterns go hand in hand. Hard to draw trend lines without candlesticks and cannot have patterns without technical indicators. Those trend lines map out the patterns.

Breakouts patterns such as the bull pennant happen when a stock breaks resistance. Buyers get excited. Candlesticks and moving averages form those key levels as well as becoming important buy and sell signals

Being able to draw correct trend lines is important. If drawn incorrectly, could mess up the entry. All of this works hand in hand.

The more confirmations, the more experience, the better chance at a successful trade. Remember that not every trade will be successful; however technical analysis can help increase the success of the trade. Win some, lose some.

To be a good trader, important to understand how to be a good loser. Sounds messed up, but it is the truth, and not many trading communities are going to tell the truth. 

They are going to only focus on wins, never losses when talking about trading. It is not like that. 

The team at BullishBears can help you beat the odds and become a good trader. It just takes effort. 

SPY Bull Pennant

How Many Patterns Do They Make?

Candlesticks group together to form many different patterns. There are patterns within patterns. That is why it is important to be able to spot patterns.

If relying only on patterns that are bullish but see bearish candlesticks there is a chance to get thrown off.

Patterns break down all the time. There may be a large bullish continuation pattern, but inside of that is a smaller bearish pattern. Get good at finding patterns within patterns.

It is also important not to get bogged down in the minutia of what a pattern is. Patterns such as the bull flag, symmetrical triangle, and bull pennant can all look alike.

They all tell a similar story; a trend continuation is imminent. Instead of focusing so much on what a pattern looks like exactly, focus on the message being sent. Read between the lines.

How to Trade Bull Pennant Patterns

  • Watch for a bullish candlestick that forms a flag pole.
  • Look for several consolidation candles that form a pennant and hold support levels.
  • Once price breaks out of the apex of pennant take entry.
  • Watch if price can break above high of flag pole.
  • Use candlestick close below midway of pennant as your stop.

Bull pennants are continuation patterns during a strong trend. In the charts shown above we have seen the pennant form as well as break resistance and continue up. Those resistance levels are important.

Because a pattern can break down understanding that the need for confirmation of the continuation is important. The real bodies and wicks of candlesticks, as well as, the trend lines form the resistance.

If the pattern breaks down, it might be appropriate to go short, or take profit! Do not go thinking that every pattern will do exactly the same thing every time.

If you want to really see the hidden hand behind the pattern, take a look at a platform like FlowTrade which shows what the instructional money is doing…knowing this helps a lot to have confidence in the trade.

Every point in the market is unique. Every trading day, and minute, is like a snow flake. No two are alike, but similarities will be found.

Volume coming in also confirms the move. It is important to study these patterns.

Bull Pennant HD

Multiple bull pennants here on $HD chart; bounced off 9EMA daily and found momentum.

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