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THE MARKET WHISPERER 15 9
break out upward in accordance with the original trend, similar to a bull
flag, but without the flagpole. By contrast, if the price consolidates into a
pennant while trending down, it is reasonable to assume that a breakdown
will occur with a downward movement, similar to a bear flag, but without
the flagpole.
Pennant Breakout, SanDisk – SNDK
SanDisk rises immediately when the trading session opens [1],
encounters resistance, and consolidates in the pennant form. The pennant
breaks out [2] and SanDisk continues rising. The buy position can be at the
exit from the pennant, or in the transition above the “flag” area. As you see,
this breakout formation is very similar to that of the bull flag, but instead of
consolidating beneath the upper resistance line, the price consolidates in
the shape of a pennant. Personally, I prefer to trade the bull flag formation.
It is clearer and simpler to identify entry positions.
