This strategy has a few notes:
  • Timeframe: It is best to use an M15 or higher frame
  • Currency pair: Any
  • Technical indicators: Not required
Before going into the trading principle, you should pay more attention that we do not confuse the bullish bunting flag pattern with the bullish flag model. Although they are both bullish flag patterns, giving signals of a continuation of an uptrend, they are in fact different. You see the picture below:

The left-hand side shows the flag pattern, the right-hand side shows the pennant pattern. So we can quickly distinguish the differences between these two models. The flag pattern will be shaped like a rectangle. The bunting flag pattern looks like a triangle.

Let's talk a bit about the bunting flag pattern. The pennant pattern is a trend continuation pattern. A bullish pattern is formed during an uptrend and vice versa. This pattern formation represents a slowdown and consolidation period. When the price breaks the average tissue, it is a signal that the market is ready to continue its trend.

Trading principles
  • The market needs to be in an uptrend, at which point you wait for the market to form a bullish buoyant pattern. Draw two trend lines, one up and one down, to represent the pennant pattern.
  • Wait for the price to break the downtrend line.
  • When the price breaks above the downtrend line, we need to make sure that the breakout candle closes outside the downtrend line.
  • Place a buy stop order 3-5 pips from the highest price of the breakout candle.
  • Place your stop loss about 5-10 pips from the lowest price of that candle.
  • Set your take profit point 3 times the risk of the strategy or place the take profit at the previous peak as long as the RR ratio is in your favor.
  • Or you can also manage your trade by moving your stop loss when the trend makes a new bottom.
You see the picture below:

Advantages of this trading strategy
  • This is a price action strategy that has a fairly simple principle
  • This pattern helps you not to miss a trend.
  • If there is a strong trend you will easily make a large profit.
  • This pattern appears on all timeframes.
Disadvantages of the trading strategy
  • There is still a probability of loss when you use this model so capital management is a must.
  • Sometimes a breakout should be a big breakout candle, which means your risk will be huge, and at the same time your RR ratio will not be beneficial anymore, so in this case, consider the real thing. carefully whether to enter the order or not.
  • If you do not focus on the chart you will easily miss this pattern