Another variant of this pattern is referred to as a bullish pennant, where the consolidation takes the form of a symmetrical triangle. A bull flag is comparable to Bull Flag Pattern a bear flag, with the exception that the trend is upwards. An intense rally followed by a flag-shaped trend halt helps traders identify bullish flag formations.
It is a pattern of market consolidation that includes a slight countertrend retracement to the downside. A Bull Pattern is a technical analysis chart pattern that suggests an asset’s price is likely to continue its upward movement. It typically occurs in an upward-trending market and is characterized by a strong and rapid price rise (the «flagpole») followed by a period of consolidation. A Bear Pattern, on the other hand, is a technical analysis chart pattern that suggests an asset’s price is likely to continue its downward movement.
It includes three peaks with troughs between them and can be followed by a significant breakdown. In this guide, we’ll highlight what traders need to know about head and… Successful trading relies on having good information about the market for a stock. Price information is often visualized through technical charts, but traders can also benefit from data about the outstanding orders for a stock. Bull flags typically appear in an uptrend when the price trend is expected to continue upward. Bear flags are usually observed in a downtrend when the asset’s price is anticipated to face further downside pressure.
- Therefore, this pattern indicates that the market is pausing before moving in the same direction as the primary trend.
- However, instead of a rectangular outline of the flag, this pattern consolidates into a triangular form with the top line descending and the bottom line ascending.
- In the bull flag patterns, for instance, the flag pole is formed first.
- A pennant is a symmetrical triangle that is formed in a horizontal consolidation pattern.
After a period of consolidation, the flag must resume the upward trend in order to be considered a bullish flag pattern. Otherwise, the pattern fails, which we’ll discuss later in the post. This resumption should be accompanied by the presence of renewed volume (demand). While the trading could create a ‘W’, that may not always be the case. The top and bottom lines of the flag have a parallel downward trend until the stock sees a breakout to the upside. This is probably the most common variant of the bull flag pattern.
Bearish Pennant Patterns
It is formed when price movements create a narrow, sideways consolidation that slopes downward. In the bull flag patterns, for instance, the flag pole is formed first. Technical analysis chat patterns have many such nuances, but it’s really not as complicated as it seems at first glance. It’s constituted after the price action trades in a continuous uptrend, making the higher highs and higher lows. A bull flag resembles the letter F, just like the double top pattern looks like an “M” letter and a double bottom pattern – a W letter.