Candlestick pattern «Pennant» - where the market wind «blows»
- VFX Blog
- For beginners
In technical analysis, the "Pennant" pattern works as a trend continuation model – a special case of a stronger "Wedge" reversal pattern. On persistently volatile assets, this pattern occurs constantly, is implemented correctly in theory, and will be one of the best options for how to make money on binary options.
The appearance of "Pennant" means short-term consolidation. In simple words, this happens when there is an imbalance of volumes in the market with too active speculation and the market cannot decide on the overbought/oversold period for some time. This happens after strong news or when removing large open volumes in the zone of strong price levels.
If the bullish or bearish "Pennant" is generally determined by the trend, then the horizontal "Pennant " is similar to the symmetrical" Triangle", that is, it shows a temporary market balance of buyers/sellers with a slight advantage of the current direction. After a pause, the market should continue the price movement along with the previous trend. To trade, you need to check for a similar pattern and binary option trading signals on higher timeframes.
Technical analysis began to distinguish "Pennant" as a special trading scheme more recently: it has a strong "visual" connection with the classic "Triangle" (support/resistance zones) and "Flag" ("flagpole" and "panel").
Correctly identifying such "relatives" is quite difficult. As a result, the "Pennant" and "Flag" figures should be traded in the same way, and what will happen after the symmetrical "Triangle" depends on the dynamics of volumes, here you can not do without additional analysis or binary options signal service.
Use in trade practice
The basic scheme for pattern formation:
- Price impulse (manipulations with large volumes, news speculation, and other force-majeure of the market).
- The second impulse is a pullback - market makers take profit/loss after the first impulse and open new orders.
- Flat period - the amplitude of the price movement is gradually decreasing.
- The main trend is restored; the binary options opened at the second stage are closed.