How to trade Forex with Pennants Chart Patterns
Pennants Chart Patterns or flag-shaped graphic patterns are the same pattern as the rectangle chart patterns, which are both continuation patterns. There are two kinds of flag patterns, namely the bearish pennants chart patterns and bullish pennant chart patterns .
After a movement that tends to rise (uptrend) or down (downtrend) the sellers and buyers begin to get tired and take some time (consolidation) by forming a pattern such as a banner or a sideways triangle before continuing to continue the previous movement.
When prices are consolidating there will be many sellers and buyers who decide to jump and continue the movement in full force.
Bearish Pennants Chart Patterns
A bearish pennants are formed by a sharp downtrend which then many sellers join in so that there are some sellers who close their positions to take profit so that the consolidation process forms like a banner.
When more and more sellers join in, the price drops strongly and continues the previous movement (downtrend).
As we can see that the price will continue its movement after being able to penetrate the support level and we can open a position with an entry level below the support level and we should get a decent profit 🙂 but we have to keep watch if it turns out we are wrong by installing a stop loss above the banner pattern to reduce losses of course.
Bullish Pennants Chart Patterns
If the following is about the other chart patterns, bullish pennants are formed due to the gathering of bulls who are able to move prices up after experiencing consolidation first.
So when consolidating a lot of traders, buyers (bulls) enter the market as a result the price can be lifted upwards. So when we open a position above the resistance level, we will get a decent profit as shown in the picture below.
Like the previous discussion that we must remain firm about risk management that is to put a stop loss and take profit. For stop loss we can install it under the banner and take profit patterns at least as big as the banner pole because even though this banner pattern is small but the signal delivered is a fairly large continuous signal 🙂