Define the bear pennant before studying its exit: context, boundaries, volume and invalidation belong in the same written research record.
What defines the bear pennant
A bear pennant follows a sharp downward pole with a short pause between converging lines. Lower highs and higher lows squeeze the range. A downward impulse is essential: the same small triangle after an advance belongs to a different continuation case.
The preceding trend and duration
The research question is whether selling resumes after the brief compression. Compare the pause with the pole in price distance and duration. A long consolidation should be studied as a range or triangle rather than retained as a pennant after the fact.
The illustrated pause occupies 10 sessions. Its average volume is 37% of the pole’s average. These are measurements of this drawing, not thresholds that define every pennant or flag.
A close beyond the boundary
The illustration confirms with a close below the lower pennant line. The conventional projection subtracts the pole height from the boundary on the exit session. Keep that projected level separate from the actual lows and from the written invalidation level.
| Measurement | Value |
|---|---|
| Event session (leftmost bar is session 1) | 28 |
| Boundary at the exit | 63.65 |
| Close of the exit session | 62.85 |
| Distance beyond the boundary | 1.26% |
| Pole height | 9.00 |
| Conventional projected level | 54.65 |
Illustrative objective = 63.65 − 9.00 = 54.65The projection is a geometric reference. It is not a price forecast, a probability or an instruction to hold until that level. Describe what would contradict the premise before comparing the potential distance with the risk.
Volume through the formation
Compare volume with this stock’s own recent activity and inspect the bars on which it expands. Contracting activity during a pause and expansion at its exit can support a conventional reading, but volume does not choose the direction. A large session may reflect an event, rebalancing or an isolated trade.
| Measure | Hypothetical value |
|---|---|
| Pole, average per session | 190.9 |
| Pennant, average per session | 71.5 |
| Breakdown session | 210.0 |
| Breakdown ÷ 20-session average | 1.74 |
The displayed relative-volume calculation divides the event’s volume by the average of the 20 sessions ending with that event; it includes the event itself. It differs from a comparison with the prior 20 sessions and from an intraday comparison at the same clock time.
When the conventional reading fails
The second example escapes above the pennant high instead of continuing downward. This cancels the bearish continuation reading. A short position would also require a plan for gaps and potentially unbounded losses; the diagram itself supplies neither execution nor risk controls.
Separate this shape from nearby patterns
A bear flag has parallel boundaries. A symmetrical triangle lacks the necessary sharp pole and brief pause. A bull pennant is the counterpart after a rising impulse.
Record a reproducible chart observation
A useful chart record includes the unsuccessful cases. Define your rules before collecting examples and retain the same price scale, adjustment basis and candle interval throughout the sample.
- Record the preceding swing direction, formation duration and each boundary touch.
- Write the exact close-based confirmation and the opposite boundary or swing that invalidates it.
- Compare event volume with its named denominator, and review both resolving and failed drawings.
- Check whether a scheduled event, such as an earnings report, falls inside the window you are studying; using earnings dates in research covers where such dates come from.
- Inspect the same stock on the Symbol Analysis guide, then record your observations in a trading journal.
These guides teach manual chart interpretation. A near-high or range screen lists candidates to inspect; it does not identify this formation.
Continue with
- Support, resistance and trendlinesHow horizontal levels and sloping lines are drawn and tested.
- Breakouts and pullbacksWhat a close beyond a level shows, and how retests are read.
- Put stock volume in contextCompare a session’s volume with the same stock’s usual activity.
- Candlestick patternsSingle- and multi-session candle shapes read alongside chart patterns.
- Stop-loss and profit targetsWhere invalidation levels and objectives fit in a written plan.
Sources
Read our data and methodology notes for calculation context. This guide explains research tools and observations. It does not recommend a trade or investment.