Bullish Pennant

In the fast-moving world of trading, recognizing continuation patterns can help you stay on the right side of the trend. One of the most powerful of these patterns is the Bullish Pennant — a formation that often signals that a strong upward move is just catching its breath before continuing higher.

• What Is a Bullish Pennant?
• What Does It Mean?
• Key Characteristics of a Bullish Pennant
• How to Trade It
• Example
• Final Thoughts

What Is a Bullish Pennant?

The Bullish Pennant is a continuation pattern that forms after a sharp price increase, known as the flagpole. After this strong move, the price consolidates in a small, symmetrical triangle — the pennant — before eventually breaking out in the same direction as the initial move: upward.

Visually, it looks like this:

• Flagpole: A strong, nearly vertical rise in price with high volume.
• Pennant: A brief consolidation where price moves in a narrowing range (like a small triangle).
• Breakout: A surge upward through the pennant’s resistance line, often with strong volume again.

What Does It Mean?

The Bullish Pennant reflects a temporary pause in a strong uptrend. During the pennant phase, buyers and sellers are in a brief tug-of-war. But this is typically just a moment of rest — like a spring being compressed. When enough pressure builds, the price often explodes upward, continuing the prior momentum.

This makes it a favorite pattern for momentum traders and trend followers.

Key Characteristics of a Bullish Pennant

• Appears after a strong upward move (the flagpole).
• Short duration: usually lasts between 1–3 weeks on daily charts.
• Volume is high during the flagpole, and declines during consolidation.
• Breakout occurs with increased volume.

How to Trade It

Here’s a simple trading approach:

• Identify the pattern: Look for a strong move up, followed by a tight triangular consolidation.
• Set your entry: Place a buy stop order just above the pennant’s resistance line.
• Set your stop-loss: Place it just below the lower support of the pennant.
• Target: Measure the height of the flagpole and project it upward from the breakout point. This gives you a price target.

Example

If a stock moves from $50 to $60 during the flagpole, and then consolidates between $58–$60, the potential breakout target could be $70 ($60 + $10).

Final Thoughts

The Bullish Pennant is more than just a visual pattern — it’s a story of strength, where the market pauses before launching higher. With discipline and confirmation (like volume on breakout), this pattern can offer high-probability setups in trending markets.

Stay patient, stay alert, and when you spot a Bullish Pennant — be ready. It might just be the calm before the storm… in your favor.