Bear Pennants are bearish technical formations. They are classified as continuation patterns for the fact that the secondary move is a continuation of the primary move (flag pole).
A bear pennant pattern is characterized by an almost straight decreasing line (flag pole), followed by a pause in the middle in a triangle formation (pennant), before continuing what is typically a swift move to the downside. The pennant is thought to be the halfway point in the decrease in this bearish continuation pattern.
Let's review and include volume in the analysis this time.
First, there is a swift move to the downside (flag pole) that is accompanied by a large spike in volume:
Next, there is tightening consolidation on decreasing volume, creating a somewhat symmetrical triangle pattern (pennant):
Lastly, there is a break below pennant support on slightly higher volume (or sometimes extremely higher volume) which confirms the patterns and should be the point at which technical based Trader's enter a short position.
The height of the flag pole is utilized to establish the target. In the example, the flag pole starts at approximately 185 and ends at around 155 giving it a height of about 30. Subtract 30 from the pennant support breakout price level of 157.50 to obtain the target of 127.50. As you can see, the stock has room to rn lower in the example above.
Related Terms: Bull Pennant Pattern, Bear Flag Pattern, Bull Flag Pattern
See also: Cup With Handle Pattern, Bearish Gap, Bullish Gap, Gap Fill