Bullish vs bearish pennants: what’s the difference? To practise identifying and trading patterns without risking any capital, open an IG demo account today. Spotting bearish and bullish pennants can be tricky at first because the consolidation is often small when compared to the preceding price move. Once it moves outside of its support line, any sellers who have been holding back jump on – sending it to new lows. But consolidation can’t last forever, and without enough bullish sentiment to recover, the market turns bearish once more. Like with bullish pennants, this causes the market’s price to consolidate. The sellers that have pushed its price down might then back off and take profit, while bulls sense the potential for a bounce back. In a bearish pennant, strong negative sentiment causes a market to plummet lower (forming the pole). The volume then rapidly builds once the market breaks out. Like with bullish pennants, falling volume is often a good sign that a bearish pennant is forming. Like their counterpart, bearish pennants can occur over any time frame. When technical traders spot a bearish flag pennant, they take it as a sign that the downward price move is going to continue once the market breaks below its support line. They’re essentially the opposite to bullish pennants: instead of consolidating after a move up, the market pauses on a significant move down. What is a bearish pennant?Ī bearish pennant is a technical trading pattern that indicates the impending continuation of a downward price move. Those traders who have been waiting to buy the market leap in and send it skyward once more. In a bullish pennant, the positive sentiment wins out. This parity between supply and demand causes its price to consolidate. The buyers that have pushed the market higher then might back off and take profit, while bears sense the potential for a retracement. In a bullish pennant, strong positive sentiment causes a market to spike higher (forming the pole). Then, when the market begins to break out of the pattern, volume spikes. One extra clue that a bullish pennant is forming is falling volume as price consolidates.
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