The bullish pennant Forex chart pattern trading strategy is a price action trading system based on the bullish pennant pattern.
Now you may be wondering:
What is a bullish pennant mt4 chart pattern?
Well, here’s a bit of a simple introduction for you fx newbies.
Introduction To The Forex Bullish Pennant Chart Pattern
A bullish pennant mt4 chart pattern is considered a continuation pattern that forms in an uptrend.
There are three main components of a chart bullish pennant pattern:
- the pattern flag pole
- the height of the flag pole
- the profit target (should equal the size of the flag pole)
As you may have noticed above, some forex traders would use the height of the flag pole to calculate the profit target(TP).
Here’s a simple example of the different parts of the chart bullish pennant I was talking about:
Here’s what a bullish pennant forex chart pattern looks like on a chart:
Mt4 Currency Pairs To Trade
The bullish pennant Forex chart pattern can form in any currency pair, so there is no restriction on what currency pairs you can trade in this system.
Timeframes To Trade
You can use any timeframe to trade the bullish pennant chart pattern, but I suggest using a 15-minute timeframe and above.
This is a 100% price action forex trading system; no forex indicators are required.
How To Trade The Bullish Pennant MT4 Chart Pattern-The Trading Rules
Trading the simple bullish pennant mt4 chart pattern should be relatively easy. The one simple thing you should make sure of is that the market is in an uptrend.
And after that strong upthrust uptrend, the price will gradually come to rest or, let’s call it, “consolidation,” while it builds its some energy to the next stage of the upward move.
So how do you trade it? There are two options where you can simply trade it, and this chart below shows how:.’
Option 1: Trade The pattern Breakout Of The Highest Peak of the Bullish Pennant Pattern
- Place your buy stop order at least two pips above the high of the highest peak in that pattern.
- place your stop loss(SL) at the lowest point in the pattern
- For take profit(TP), use the height of the flag pole to calculate your take profit target(TP) level or if not, use a previous swing high as a take profit target level, or you can use a risk: reward ratio (R: R) of 1:3 to calculate it.
Option 2: Trade The Pattern Breakout Candlestick
The breakout candlestick is the chart candlestick that breaks the top trendline and closes above it. When that happens:
- place a pending buy stop order two pips above high of that breakout candlestick
- Place your stop loss(SL) at least 5-10 pips below the low of the breakout chart candlestick, but if you fear you risk getting hit SL, move your stop loss(SL) to the lowest point in the pattern as in option one stop loss.
- Take profit calculations are the exactly same as that of option one above.
Advantages of The Bullish Pennant MT4 Chart Pattern Forex Trading Strategy
- If you think you’ve missed a good strong trend move from the start, this forex trading system allows you to jump in along the way.
- The risk: reward ratio(R: R) a good if your trade works out as anticipated.
- Trading rules are straightforward to understand and execute.
Disadvantages of The Bullish Pennant MT4 Chart Pattern Forex Trading Strategy
- The breakout candlestick can sometimes be very long, so your stop loss distance can be significant. In such a situation, avoid trading it.
- Bullish pennant chart patterns can be subtle, and you need to pay attention or have a good eye to see what is happening, and in this regard, many new forex traders may find it difficult at first.
Read More: 123 Chart Pattern Forex Trading Strategy