GUIDELINES of Pennants forex trading strategy

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GUIDELINES of Pennants forex trading strategy

A pennant is a short triangular shaped chart pattern. It can act as a trend reversal or continuation pattern.
Appearance short triangle bounded by two converging trend lines
These patterns are usually preceded by a sharp advance or decline with heavy volume, and mark a midpoint of the move
Price bounded by two trend lines
Surrounding the price action converge, trend lines forming a small pennant shape. Price usually goes against the trend: It rises in a downtrend and falls in an uptrend.
Three-week maximum
Pennants are short patterns lasting from a few days to 3 weeks. Patterns longer than 3 weeks are symmetrical triangles or wedge
Steep, quick price trend
 Look for a quick (steep) price move (up or down) leading to the pattern.
Downward volume trend
Volume usually trends downward throughout the pattern
Measure rule
Calculate the price difference between the start of the trend and the
pennant. Prices should move at slightly less than this amount above
(for uptrends) or below (for downtrends) the end of the pennant.
Wait for breakout
Take a position forex trading signals  once price closes outside the pennant boundary.
Close out trade
 Close out the trade when price stalls, usually as it approaches the measure rule target or a support/resistance zone
Price trends pennants always rest upon a flagpole, so look for a strong price run leading to them.
Two converging trendlines
 For pennants, price follows two converging trendlines.
Volume in the pattern recedes.
Breakout Can be in any direction.
Duration pennants are shorter than three weeks
A pennant appears atop a flagpole. For easy identification,
look for the flagpole first—a strong straight-line price run.
How often price touches the trendline borders is not important for pennants
pennant can slope in any direction, but most often, it will lean against the prevailing price trend.
If the chart pattern does not have a flagpole, then it is not a flag or a pennant.
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