![]() ![]() For our EUR/USD trade, for example, you might be risking 10 or 20 points in exchange for 200 points of potential profit. This is one reason why pennants are so sought after by traders – relative to other patterns, the risk-reward ratio tends to be high. With both strategies, your stop is far closer than the point at which you take profit. You’ll want to give enough room for the price to oscillate before any breakout takes hold, but not so much that your losses are too great if the pattern breaks. If you’ve waited until the market retests its old area of support or resistance, you’d place your stop a few points below your entry position.
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