Page 10 - Module 14 Pattern Formations

Module 14 – Pattern Formations

Fig 5 – Example of Bullish
Pennant, whereby No 1
indicate the Pole of the
pattern

As shown above, before the flag-like pennant forms, the price experiences a sharp rise. This is known
as the pennant's 'pole'. The pole can represent either the start or the continuation of an uptrend and
its size is important when you are calculating where to place the profit target for your buy trade.
The triangular pennant itself is usually very small in relation to the size of the overall uptrend so this
pattern can be hard to spot. With practice however, you will learn when to look out for it and how to
recognize it.

How to trade the bullish pennant
We will now show you how to trade the bullish pennant.

Enter your trade
Enter your long trade as soon as a candlestick has closed above the pennant's upper trend line.

Fig 6 – Example of where to
enter trade whereby No 1
indicate Pole of the pattern
the Blue No 1 will be the
buy order entry point.
Place stop on the other
side of the pennant, below
the lower trend line

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