Bear Pennant: How to Trade with a Bearish Chart Pattern
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A bear pennant is a technical analysis pattern that can help you spot strong downtrends in crypto. Crypto traders enjoy bearish pennant patterns because they’re easy to spot and, once identified, can tip you off to long and deep corrections. As a result, the pattern can also help you spot false bottoms.
In this article, we’ll review what a bear pennant pattern is, what it looks like and how to confirm the pattern with indicators. Then, we’ll review in detail how a trader sets up their trade with the risk and take-profit levels noted. Finally, the bear pennant pattern isn’t always 100% accurate, so we’ll review some of its limitations.
What Is a Bear Pennant?
A bear pennant is a chart trading continuation pattern in which, after a strong move lower, prices pause and consolidate briefly, then break down further, resuming the larger correction. The pattern gets its name from the consolidation, which often looks like a pennant as prices wedge together before breaking down further. The bear pennant pattern is the opposite of the bull pennant chart pattern.