HOW TO DIFFERENTIATE POLE CHART PATTERNS

How to differentiate pole chart patterns
Infographic - How to differentiate pole chart patterns

OK, you've guessed it, we will be using highs and lows as well as the trend prior to pattern formation to differentiate pole chart patterns, just like we did to differentiate both triangle chart patterns and rectangle chart patterns.

BULLISH FLAG

Prior trend (pole) before pattern formation is sharp bullish.

Highs inside the pattern formation are descending. This means that each new high formed should be lower than the previous high.

Lows inside the pattern formation are descending. This means that each new low formed should be lower than the previous low.

A minimum of two highs and two lows are required for a valid bullish flag pattern.

BEARISH FLAG

Prior trend (pole) before pattern formation is sharp bearish.

Highs inside the pattern formation are ascending. This means that each new high formed should be higher than the previous high.

Lows inside the pattern formation are ascending. This means that each new low formed should be higher than the previous low.

A minimum of two highs and two lows are required for a valid bearish flag pattern.

BULLISH PENNANT

Prior trend (pole) before pattern formation is sharp bullish.

Highs inside the pattern formation are descending. This means that each new high formed should be lower than the previous high.

Lows inside the pattern formation are ascending. This means that each new low formed should be higher than the previous low.

A minimum of two highs and two lows are required for a valid bullish pennant pattern.

BEARISH PENNANT

Prior trend (pole) before pattern formation is sharp bearish.

Highs inside the pattern formation are descending. This means that each new high formed should be lower than the previous high.

Lows inside the pattern formation are ascending. This means that each new low formed should be higher than the previous low.

A minimum of two highs and two lows are required for a valid bearish pennant pattern.


Let's summarize the unique characteristics for each pole-shaped chart pattern we discussed in this lesson.

bullish flag lower highs
lower lows
pole: sharp bullish
bearish flag higher highs
higher lows
pole: sharp bearish
bullish pennant lower highs
higher lows
pole: sharp bullish
bearish pennant lower highs
higher lows
pole: sharp bearish