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How to Trade Bearish and Bullish Pennant defined 2023 || What is bullish and bearish pennant ? How do you identify bullish?

Bullish Pennant Chart Pattern:-

Recognize the Previous Uptrend: The price movement should have been clearly in an uptrend prior to the Bullish Pennant formation. With this uptrend, there will be a string of higher highs & lower lows.

Identify the Uptrend and Look for the Triangle Formation:
Once overall Uptrend has been located, look for a brief consolidation or a narrower range in the Pricing Action. Because of the symmetrical triangular structure of this consolidation, the market is less volatile and less uncertain.

Draw Trendlines: Create a trendline that joins the triangle's higher lows, followed by a trendline that joins the triangle's lower highs. The pattern will develop along these lines until they converge.

Volume Confirmation: As the market investors take a break during the pennant development, trade volume often declines. Volume should begin to rise again as the pattern draws to a close, indicating a potential breakout.

Breakout Confirmation: When the price exits the pennant pattern's top trendline, this signals a bullish confirmation. A spike in volume that frequently follows this breakthrough strengthens the bullish indication.

Goal Calculation:
Estimate the total length of the historical flag (the past uptrend) and extrapolate it from the breakout point to get the probable price goal following the breakout.

Manage Risk: Although the Bullish Pennant formation suggests that the uptrend will continue, there is no assurance that the price will move in the anticipated direction. In the event of a false breakout, traders should set proper stop-loss levels to mitigate risk.

Timeline Factor: The importance of the Upbeat Pennant pattern is greatly influenced by the chart's timeline. The strength of the prospective bullish continuation signal increases with the length of the past uptrend and the size of the flagpole.

The two trendlines that converge within the pennant ought to should be arranged symmetrically meaning that they have a comparable slope and intersect at about the same location. A clear and dependable signal might not be given by asymmetric pennants.

False Breakouts: The Bullish Pennant is only one of several chart patterns that might experience a false breakout. It is recommended to wait for a verified breakthrough (price close above the top trendline) and confirm the rise in trading volume in order to lower the danger of false signals.

Pullbacks following the Breakout: Following the breakout, it's not unusual for pricing to test the higher trendline again (prior resistance now serving as support). Trading professionals now have the chance to enter a marketplace at a possibly better price.

Chart pattern for a bearish pennant:

Recognize the Prior Downtrend: Before the Bearish Pennant can be seen, there must have been a distinct downtrend with lower lows & lower highs.

After determining the downtrend, search for a consolidation or a shrinking range in the price movement to locate the pennant formation. This consolidation will resemble a symmetrical triangle, which denotes a reduction in market volatility and uncertainty.

Draw Trendlines: Create two trendlines, one linking the triangle's lower highs and the other the upper lows. They will converge as the pattern develops.

Volume Confirmation: As market participants have a break during the pennant development, trade volume tends to decline. Volume may begin to rise once again as the pattern draws to a close, indicating a potential breakout.

Breakout Confirmation: When the price exits the pennant pattern's bottom trendline, this signals a bearish confirmation. A spike in volume usually occurs along with this breakout, which strengthens the negative signal.

Calculating the Target:
To determine the prospective price target following the breakout, calculate the period of the flag (the previous downtrend) and extrapolate it from the breakout point in the trend's direction.

Reduce Risk: Although the Bearish Pennant formation predicts that the decline will continue, there is no assurance that it will. In the event of a false breakout, traders should set proper stop-loss levels to mitigate risk.

Priod Consideration: The Bearish Pennant's importance is determined by the chart's period, much like the Upbeat Triangle is. The potential dependability of the bearish continuing signal is perhaps increased by longer preceding downtrends and greater flagpoles.

Similar to the Bullish Pennant, the Bearish Pennant design is chosen when the trendlines are symmetrically converging. The predictability of the pattern may suffer from asymmetry.

False Breakouts: In the event of the Bearish Pennant, traders should exercise caution in regards to false breakouts. Consider increased trading volume and wait for a verified breakdown (price closing under the lower trendline) to confirm the red signal.

Pullbacks following the Breakdown:
Following the breakdown, it is not unusual for the price to once again check the lower trend line (prior support now serving as resistance). Trading participants are given the chance to start short positions at maybe more beneficial levels as a result.

Market Sentiment: It's important to take into account the general state of the market as well as any underlying variables that might influence the trend. The pattern's result can be influenced by economic data, current affairs, and geopolitical happenings.

Keep in mind that while chart patterns may be a very useful tool for predicting future market moves, they ought to always be employed when used with other trading and fundamental research techniques. In order to safeguard your money and improve your trading technique, it's also critical to engage in risk management & position size. Trading has risks, and no approach to the financial markets can ensure success.


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