Forex Swing Trading Strategy #8:(Bullish Pennant Trading Strategy)

The bullish pennant trading strategy is a strategy where you use one of the common forex chart patterns called the bullish pennant to enter into a long trade (buy trade).

Do not get confused with bullish pennant forex chart pattern with the bull flag forex chart pattern formation, they are different but have one thing in common-they are both bullish continuation forex chart patterns.

Also do not get confused with the bearish pennant forex chart pattern with the bear flag forex chart pattern  as they are different as well but have one thing in common: they are both bearish continuation forex chart patterns.

The bullish pennant trading strategy is a pure 100% price action trading strategy. You don’t need any forex indicator at all but you just need to develop the ability to spot this pattern as it is forming on your forex charts so you can trade it.

WHAT IS THE DIFFERENCE BETWEEN A FLAG FOREX CHART PATTERN AND A PENNANT FOREX CHART PATTERN?

The only difference between a pennant chart pattern and a flag pattern is that is that a flag pattern looks more rectangular shape where as a pennant looks like a triangle.

 

Bullish Pennant Forex Chart Pattern

 

THE PENNANT CHART PATTERN

The pennant chart pattern is a common chart pattern used in forex technical analysis and it is formed when you draw two converging trendlines (see above chart).

  • For a bullish pennant chart pattern to form, there has to be an existing uptrend.
  • For a bearish pennant chart pattern to form, there has to be an existing downtrend.
  • the formation of  a bullish pennant pattern shows a period of market consolidation
  • a breakout of this bullish pennant chart formation should breakout to the upside continuing the original uptrend.
  • so the bullish pennant chart pattern is a bullish continuation pattern.

HOW TO TRADE THE BULLISH PENNANT-THE TRADING RULES

Timeframes to trade: 1hr, 4hr and daily timeframes are the best timeframes to trade this chart pattern (they are more reliable)

  1. When an uptrend has started, you wait for the bullish pennant formation to form.
  2. You do this by drawing two converging trendlines and wait for price to breakout of the downward trendline to the upside.
  3. Once price breaks out to the upside, makes sure the candlestick must close outside of the downward trendline.
  4. Place a buy stop order 3-5 pips above the high of that candlestick that has just closed.
  5. For stop loss, place it 5-10 pips below the low of that candlestick.
  6. Set your take profit at 3 times what your risked or use a previous swing high point and set the price level of  that as your take profit target level.
  7. How to manage your trade: as price continues to move upward, lock in your profits by moving stop loss and trailing it behind “bottoms” that form as price continues to move up.

 

Bullish Pennant Pattern Trading Rules

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADVANTAGES OF TRADING  THE BULLISH PENNANT FOREX CHART 

  • 100% Price Action Trading Based only on Price Action
  • If you’ve missed an uptrend from the beginning, the bullish pennant trading strategy allows you to get in along the way.
  • in a strong trending market, you will make lots of pips easily with this forex strategy.
  • the bullish pennant forex chart pattern does occur regularly in all timeframes.

 

 THE BAD

  •  Forex Technical Analysis Using Price Action Trading Is good but they will not give you 100% trading success rate (no forex trading strategy can give you a 100% rate)
  • sometimes the breakout to the upside will result in a very long candlestick which means that your stop loss may be quite large so you have to decide to take this kind of trade or let it pass by or reduce the size of your contracts you trade.
  • if you are not paying attention or not really focused on looking for this chart pattern, you may miss it because it does take a little bit of skill to identify it and trade it succesfully.

So there you have it, the bullish pennant trading strategy  which you can start using now.

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