How to Trade Forex With Pennants Chart Patterns – Trader friends, in the trading world there are lots of tricks and strategies that can be applied. Also, various patterns can be applied as a trading strategy for traders’ friends, where the use of patterns in this trading strategy allows trader friends to gain maximum and consistent profit from the forex market.
Pennants Patterns or banner-shaped chart patterns are the same patterns as rectangle chart patterns, which are both continuation patterns. There are two kinds of banner patterns, namely bearish pennants chart patterns and bullish pennants chart patterns.
After forming a movement that tends to go up (uptrend) or down (downtrend), sellers and buyers begin to get tired and rest for some time (consolidation) by forming a pattern such as a sideways pennant or triangle before finally continuing the previous movement. When prices are consolidating, there will be many sellers and buyers who decide to jump and continue the movement with full force.
This pattern is a development and merger of a symmetrical triangle pattern with a flag pattern.
Pennant Pattern Characteristics
- When the pennant pattern is formed, usually the price of a pair is experiencing a long and quite steep rally.
- because this pattern is an amalgamation of a symmetrical triangle pattern and a flag pattern, the condition for this pattern to be valid is a combination of 2 elements of the pattern.
What are Pennants Patterns?
Bearish Pennants Chart Patterns
A bearish pennant is formed by a sharp downtrend which then many selling traders enter so that some selling traders close their positions to take profit so that the consolidation process is formed like a banner. When more and more selling traders enter, the price drops very strongly and continues the previous movement (downtrend).
Bullish Pennants Chart Patterns
If the following is about other pennants chart patterns, namely bullish pennants that are formed due to the gathering of bulls (bulls) who can move the price upwards after experiencing consolidation first. Like the previous discussion, we must stick to risk management, namely installing stop losses and take profits.
For stop loss, we can put it under the banner pattern and take profit at least as big as the flag pole because even though this pennant pattern is small but the signal that is transmitted is a fairly large continuous signal.
Price Pattern That Signs The Breakout
Previously, the successor price pattern was mentioned about the symmetrical triangle. The symmetrical triangle type price pattern is a chart pattern that must be watched out for because this price pattern is very uncertain because it can continue or even away from the trend.
Why is it difficult to be certain? Because the symmetrical triangle will usually be formed as a result of high and low prices which will taper off. That’s when the buyer’s strength will continue to decline. However, after the price starts moving and will break through the symmetrical triangle pattern, it will cause a breakout with a pretty fast movement. Thus this review, I hope this article is useful.