How to Trade Bull Pennants

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. Watch our video on how to identify and trade bull pennants.

What Is a Bull Pennant Pattern & How to Identify Bull Pennants?

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. You will see many 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. The bull pennant pattern is a short term continuation pattern.

It has a small consolidation period before resuming it’s move up or down. Next Watch our video above to learn how to identify bull pennant patterns.Bull pennants are similar to bull flags. Day traders in particular love the bull pennant pattern. It’s one of the most popular patterns out there 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 but 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’s important to keep your 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, we’ll always be trading those two commodities.

Basics of Bull Pennants

Bull Pennant Patterns

Bull pennant trading has converging trend lines during consolidation. The consolidation period is usually where I like to enter. I watch the level 2, time and sales, and volume bars on a stock chart. It’s very intense to trade bull pennants, but I love the rush.

I don’t trade emotionally though. When I trade, I trade systematically and robotic ally. We are after all, trading against algos and HFT’s. So it’s important to think like a robot when it comes to trading (Check out our stock market training page).

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.

Additionally our post about what does volume mean in stocks delves deeper into the importance that volume has in trading. If you can focus on volume bars and trends, you’re going to have a better time trading bull pennants, trust me.

Indeed because this post is all about bull pennants we’ll be discussing the bullish side of the street. If you’re a bear and want to learn about bear pennants go check out our bear pennant post.

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. You’ll see indecision candles like doji candlesticks or dragonfly doji candlesticks maybe even hammer candlesticks inside the consolidation period. Again, I like to personally enter inside the pennant part (wedge part) and typically I am entering at a 9 EMA on some time frame. The 9 EMA is one of my favorite moving averages, join our trade room to find out why and see me teach our members why!

Technical Analysis

If you’ve been reading our blog posts, you’ve seen by now how important candlesticks are to technical analysis basics. You can’t have the simple moving average formula or the VWAP trading strategy without them.

They’re 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. You can’t draw trend lines without candlesticks and you can’t 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 you don’t draw them correctly, you could be messing up your entry. Not to mention all of this works hand in hand.

The more confirmations you can get, the more experience you have, the better your chance at a successful trade. You will lose some, but you’ll win more.

To be a good trader, you need to be a good loser. Sounds messed up right? It’s the truth, and not many trading communities are going to tell you the truth. 

They are going to only focus on wins, never losses when talking about trading. It’s not like that. Any one with experience will tell you, if they are being honest with themselves and you.

It’s hard! But don’t let that discourage you. You can beat the odds, and the statistics, and become a good trader. It just takes effort. Looking for more stock training? Take our free stock trading courses to help you get started.

SPY Bull Pennants
Check out the hourly bull pennants on this #SPY chart. During bull phases these patterns are awesome to look for long entries.

How Many Patterns Do They Make?

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

If you’re relying only on patterns that are bullish but you see bearish candlesticks there’s a chance you could 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’s 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 also all tell you the same thing. A trend continuation is imminent. Instead of focusing so much on what a pattern looks like exactly, focus on the message it’s sending. Read between the lines. 

Bull Pennant Patterns

How to Trade Bull Pennant Patterns

  • 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.

We’ve learned that bull pennants are continuation patterns during a strong trend. In the charts shown above we’ve seen the pennant form as well as break resistance and continue up. Those resistance levels are important.

Because a pattern can break down you need that confirmation of the continuation. 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 your profit, depending on entry! Don’t 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 you 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 you will find similarities. 

Volume coming in also confirms the move. It’s super important to study these patterns. You can use them whether you’re using penny stock trading, swing trading strategies or day trading strategies.

Bull Pennant HD
Check out the bull pennants here on $HD chart, it bounced of the 9EMA daily and found it’s momentum while making some really nice patterns to trade. This is the kind of stuff you look for peeps!

Practice Trading Bull Pennants!

The key is to study them and then practice. Open up a paper trading account and make hundreds of practice trades. The best traders make bad trades 30 or 40% of the time. You will too and that’s ok. Practicing before you use real money helps you in identifying what you did wrong so you don’t blow up your account when you go live.

If you practice with a dummy account first, you can prove that you can make money in a paper account versus going in a real account first.

Protect yourself from making bad mistakes by following the outlines we have set for you and your trading journey. Remember, Bull Pennants are best played when entering as close to the apex of the pennant as possible! Consider scanning for them using a scanner link Finviz which will find these for you automatically as well. See you in the trade room!

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