Bull Pennant - Bull Pennant Pattern
The bull
pennant pattern is found within an
uptrend in a stock. This pattern is
named for the resemblance of a pennant on a pole. The bull pennant is a continuation
pattern with narrowing price action following a strong advance. The
technical buy point is when price penetrates the upper
trend line of the pennant
area, ideally on volume expansion.
Context: Found within an uptrend.
Appearance: The advance has solid volume and the upward price action
is strong, which forms the vertical look of a flagpole. The resting period
and narrowing price action is characterized by volume contraction as upside
intensity is temporarily interrupted. This forms a pennant which also
resembles a small
symmetrical triangle. The pennant portion of the pattern
has highs and lows which can be connected by small trend lines which converge.
Breakout Expectation: The height of the flagpole may be added to the
breakout area at the end of the pennant to determine the expected advance which
follows.
This is why the bull pennant pattern is often found in the middle of stock
advances as a continuation pattern.
This stock formed a pair of bull pennant
patterns during its uptrend. Each bull pennant was merely a resting period
for this stock as it gathered strength to break out and trend much higher.
Be sure to learn about the
bear pennant pattern too.
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