Tilray’s Massive Bull Pennant Chart Pattern: Is The Stock Set To Pop Or Drop?

If you have any experience in Technical Analysis, take one glance at a 1-year candlestick chart of Tilray Inc. (Nasdaq: TLRY) and one aspect of their chart should immediately be apparent to you. You will notice Tilray’s massive Bull Pennant chart formation. It’s HUGE, you can’t miss it.

For those new to Technical Analysis (TA), let’s first establish what a bull pennant is and what it could mean for Tilray’s share price moving forward. As per Investopedia, a bull pennant is a “continuation pattern in technical analysis formed when there is a large movement in a security, known as the flagpole, followed by a consolidation period with converging trend lines – the pennant – followed by a breakout movement in the same direction as the initial large movement.”

Why These Patterns Form

The consolidation period after the breakout that formed the flagpole is caused by a period of indecisiveness in the market. Essentially it’s a battle between the bulls and bears and can last a short amount of time or can drag out for months or even years. A good rule of thumb that is normally accurate is the longer the consolidation period the larger the breakout at the end.

The pennant is formed by the trendlines starting at the top and bottom of the flagpole and extending out to the right while gradually sloping inward toward one another. As the fight between the bulls and bears grows more even the trendlines will eventually meet a point called the “apex”. As the stock approaches the apex of the pennant, volume should begin to pick up as the stock prepares to make its move and breakout.

In these types of patterns, the stock can break out in either direction but in the case of bull pennants, the odds are in favour of the breakout being to the upside. This is due to the stock already being in an uptrend and the bull pennant simply being a break for the stock to reset, work off the last run and continue on its journey higher. Hence the terms “bull pennant” and “continuation pattern”.

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I have NOT been compensated for this article and hold NO positions in any of the companies mentioned.

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