What is a Pennant Pattern?

What is a Pennant Pattern?

A Pennant is a short-term continuation chart pattern that forms after a strong price move (the "flagpole"). The consolidation phase features converging trendlines forming a small symmetrical triangle. Pennants represent brief pauses before the trend resumes in the original direction.

Pennant Structure

• Flagpole: Sharp, nearly vertical price move (up or down)
• Consolidation: Converging trendlines form small triangle
• Duration: Typically 1-3 weeks
• Volume: Declines during consolidation, increases on breakout
• Breakout direction: Same as initial flagpole direction

Trading Pennants

• Entry: Enter on breakout from pennant in trend direction
• Stop loss: Below pennant low (bullish) or above high (bearish)
• Target: Measure flagpole height, project from breakout point
• Confirmation: Volume surge on breakout validates pattern

Pennants are highly reliable continuation patterns when they form after strong impulsive moves. Similar to flags but with converging rather than parallel trendlines.

Practical Playbook

• Define context on higher timeframes, then execute on intraday charts.
• Wait for confirmation (acceptance, momentum, or confluence) before entry.
• Size positions conservatively and place stops at clear invalidation levels.
• Adapt to session dynamics; conditions shift between Asia, London, and New York.

Common Pitfalls

• Forcing trades without alignment across timeframe, structure, and catalyst.
• Ignoring spreads/slippage during news or thin liquidity.
• Moving stops or adding to losers instead of honoring the plan.

Illustrative Example

Build a simple playbook: identify bias, mark key zones/levels, define triggers and invalidation, and pre‑set targets for 2–3R. Journal results by session and setup to refine rules. Over time, consistency—not prediction—drives outcomes.

Practical Playbook

• Define context on higher timeframes, then execute on intraday charts.
• Wait for confirmation (acceptance, momentum, or confluence) before entry.
• Size positions conservatively and place stops at clear invalidation levels.
• Adapt to session dynamics; conditions shift between Asia, London, and New York.

Common Pitfalls

• Forcing trades without alignment across timeframe, structure, and catalyst.
• Ignoring spreads/slippage during news or thin liquidity.
• Moving stops or adding to losers instead of honoring the plan.

Illustrative Example

Build a simple playbook: identify bias, mark key zones/levels, define triggers and invalidation, and pre‑set targets for 2–3R. Journal results by session and setup to refine rules. Over time, consistency—not prediction—drives outcomes.