What is the Ensign Formation?

The pennant formation is a formation that is considered one of the most reliable, right next to the flag formation. It comes in handy when making buying or selling decisions. The time this formation takes to form is usually from a few sessions, to about 3 – 4 weeks, so it is a short-term formation.

How to determine the formation of the flag?

First of all, to determine it will need four turning points, that is, two falls and two rises. In the case of this formation The trading volume should decrease noticeably. It is also important that the formation should occur after a virtually vertical price movement, in which there will be no major corrections.

When should the breakout from the pennant formation occur?

To be sure that we are dealing with a pennant formation, the breakout should occur up to 3 – 4 weeks from the beginning of the formation formation. If this time is prolonged, one can already have some suspicions that the situation will not be entirely clear.

Is the price movement for a pennant formation large?

In the case of a pennant formation, you can usually see a very large price movement. The range of price movement after the breakout should be at least equal to reaching it. This is a situation that in the case of increases allows you to make a good profit, but decisions must be made fairly quickly, because at the same time the breakout may head downwards, which will be a sign of significant declines.