How to trade Pennant Pattern?
How to trade Pennant Pattern?
Pennants are drawn with two trendlines that eventually converge. A key characteristic of pennants is that the trendlines move in two directions—that is, one will be a down trendline and the other an up trendline.
Different parts of Pennant pattern
There are three major parts which forms this pattern.
1. Raising up-trendline – A up-trendline, which is raising, indicating buyers are not willing to let the price go down
2. Falling down-trendline – A down-trendline, which is falling, indicates sellers are not willing to let the price to rally
3. Price Sandwich – Price should be sandwiched or trapped between the up and down trendlines, making a price consolidation.