NWS was steadily trending up when it traded into this 7-week bullish pennant pattern. The volume surge within the pattern is not typical; in fact one would think that type of volume would cause the stock to penetrate one of the trendlines. Also notice the number of touches along resistance. The more touches the better.

Here is an example of a stock that broke out from a very long basing period and then immediately traded into a bullish pennant. This scenario happens often. It takes a lot of energy to breakout of the base, so the stock needs to “rest” before continuing its move up. Notice the volume on both the breakout from the base as well as the breakout from the pennant.

SNIC was a pretty simple play. The stock was in a steady uptrend when it exploded up in late-July. The stock then trended sideways in a small pennant and then busted out again with another volume surge. Textbook pattern and trade.

FRNT is another example of a stock that broke out of large base on strong volume and then immediately traded into a small bullish pennant. After its brief rest, the stock then broke out again on another strong volume surge. This action is typical and somewhat easy to play.


» back to top