Welcome to Extreme Investor Network, where we provide you with unique insights and analysis on the stock market, trading strategies, and everything Wall Street-related. Today, we’re diving into the Small Bull Pennant pattern and how it can be used to identify potential bullish trends in the market.
The Small Bull Pennant pattern is a bullish trend continuation pattern that takes the form of a small symmetrical triangle following a sharp advance, known as the pole. This pattern is not considered valid until there is a decisive breakout, which typically occurs within five days. In this case, an upside breakout is expected, especially if the pattern forms around the support of key moving averages like the 200-Day MA.
However, it’s important to note that pattern failures are always possible. A decline through the lower boundary line of the triangle signals a failure and could lead to a deeper retracement in the market. Currently, an upside breakout can be triggered on a rise above today’s high, with further confirmation on a rally above the 2.85 minor swing high and a daily close above 2.92.
When it comes to setting a target from the Small Bull Pennant pattern, we can calculate a measuring objective to identify an initial target of 3.75. This is based on the assumption that the pole for the pattern began at 1.97 on May 2, leading to the accelerated upward momentum culminating in the 2.92 trend high. The pattern typically indicates a sharp advance followed by a consolidation period before another potential upward move.
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