Pennant pattern technical analysis in stock market

Pennant pattern technical analysis in the stock market

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Pennant pattern technical analysis in the stock market is the best chart pattern in terms of risk and reward ratio. There are two types of pennant patterns first is called bullish pennant pattern and the second is called bearish pennant pattern. This chart pattern can be seen in any different time frames.

1. This pattern is similar to like a flap pattern but it consolidates in a very small range. 
2. Pennant pattern is called a continuous pattern. The stock price continues to move in the same direction after the breakout in the pattern.
3. Pennant pattern forms then there is sudden up or down move. The stock tries to consolidate in a narrow range. The time for consolidation can be 7 to 10 bars.
4. The stock price tries to face resistance in the upper line 3-4 times and took support 3-4 times in the lower line.
5. Pennant pattern has the highest risk to reward ratio.
6. As per shown picture, there are three components Flag pole-pennant-breakout
7. The flag pole determines the possible movement after the breakout.
8. The pattern works both in an uptrend and downtrend stock
9. After sudden up move or down move stock consolidate in a narrow range called pennant 
10. After the breakout from the consolidation, the reward will be equal to the flag pole.
11. The shown picture is bullish pennant pattern if you rotate the picture if will become the bearish pennant pattern 
12. The stop loss for the trade is the low of the breakout candle.
13. Volume is very important in this pattern 
14. If the Volume in Flag pole is higher than average - volume during consolidation is decreasing and when the breakout happens the volume larger than the consolidation period it is a valid breakout otherwise it could be a trap.

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