Bearish Pennant Chart Pattern Explained
- Bullish Pennant and Bearish Pennant are both trend continuation chart patterns.
- In which Bullish Pennant is a uptrend continuation chart pattern.
- And Bearish Pennant is downtrend continuation chart pattern.
- In this article, we will discuss about the Bearish Pennant chart pattern:
BEARISH PENNANT CHART PATTERN
- A Bearish Pennant is a downtrend continuation chart pattern that formed after a sharp price movement to the downside.
- After the sharp downside movement, the price is enter in a consolidation phase.
- This pattern formed a converging trend lines during their consolidation phase.
- A sharp downward movement of the price is called the 'Pole'.
- And a consolidation phase is called the 'Pennat'.
- The previous trend of the market was down, and after the pattern breakout the trend is continuing on the down side.
- Therefore, this pattern is called the bearish continuation pennant pattern.
• When do the Bearish Pennant pattern work well ?
- The Bearish Pennant pattern work well, when the previous trend of the market is a downtrend.
- As well, this pattern would work well if it formed after a breakout of an important support level.
• When should the Bearish Pennant pattern be avoided ?
- Avoid a bearish pennant pattern if it formed in a bullish (uptrend) market.
- Because of buying pressure in a uptrend, there is a high probability that the pattern will fail.
• Entry :
- Take entry when the candle is close below the pennant.
• Stop Loss :
- SL should be placed above either the previous swing or above the breakdown candle.
• Target :
- The target should be the parallel distance of the pole.
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