Bearish Pennant Chart Pattern
Bearish pennant is a bearish trend continuation chart pattern showing continuation of a prevailing downtrend after a short-term trend continuation. This chart formation is very similar to bearish flag formation, the difference is that in pennant, the consolidation phase after the pole is triangular or pennant shapes as against flag or parallel shapes in flag formation. Bearish pennant formation also resembles symmetrical triangle formation, descending triangle formation and rising wedge formation; but this is a shorter term pattern.
Bearish pennant pattern is formed when there is a consolidation phase, because of indecision in existing downtrend. The trend lines converge to form a pennant shape which then breakout to continue the downtrend. Like flag formation, the volume tends to decrease as the pattern develops. The breakout is noticeable with great increase in volume. The duration of the pattern can be 1 to 3 weeks.
Traders can go short after the confirmation of breakout. The target price should be the height of the pole from the breakout price. Bearish pennant chart formation is less reliable when there is no significant change in volume as the pattern forms, no increase in volume on breakout or when the pattern takes more than 4 weeks to develop. There is also a chance of trend reversal if there is an increase in volume rather than a decrease.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
Bearish pennant pattern is formed when there is a consolidation phase, because of indecision in existing downtrend. The trend lines converge to form a pennant shape which then breakout to continue the downtrend. Like flag formation, the volume tends to decrease as the pattern develops. The breakout is noticeable with great increase in volume. The duration of the pattern can be 1 to 3 weeks.
Traders can go short after the confirmation of breakout. The target price should be the height of the pole from the breakout price. Bearish pennant chart formation is less reliable when there is no significant change in volume as the pattern forms, no increase in volume on breakout or when the pattern takes more than 4 weeks to develop. There is also a chance of trend reversal if there is an increase in volume rather than a decrease.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
9:59 AM
<< Home