Bullish Pennant Forex Swing Trading Strategy





This strategy uses one of the common forex chart patterns called the bullish pennant to enter into a long trade or buy trade.
The bullish pennant pattern method purely uses price actions and no indicators added.
This pattern is formed when you draw 2 converging trendlines. There must be an existing uptrend for a bullish pennant pattern to form.
For a bearish pennant chart pattern to form, there has to be an existing downtrend. The formation of a bullish pennant pattern shows a period of market consolidation. To break in this formation upside gives us an idea that the trend is continuing to go up.
Use this strategy on a 1-hour and above timeframes.

Trading Rules:

  1. The market must be in an uptrend then wait for a market consolidation for the bullish pennant pattern to form.
  2. Then, draw the 2 converging trendlines.
  3. Wait for fo the price to break the downward trendline. and the candlestick must close above the downward trend line.
  4. Place a buy stop order 3-5 pips above the high of that candlestick.
  5. For stop loss, place it 5-10 pips below the low of that candlestick.
  6. Take profit on the previous swing high or 3 times what you risked. You can also lock in profits by moving stop loss and trailing or behind the bottoms that form as the price continues to move up.

ADVANTAGES:

  • This is purely price action, no need for indicators.
  • It allows you to get in a trade if you miss the beginning of the uptrend.
  • Can gain good profits in a strong trending market and occurs regularly in all timeframes.

DISADVANTAGES:

  • The breakout can give you a very long candlestick, it means that your stop loss can be quite large.
  • Hard to identify the pattern if you are not focused.
Open EURUSD 1-hour for the template.

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