What is a Pennant Pattern?
Pennant
Forex Trading Glossary
Quick Answer: A pennant is a continuation pattern where price consolidates into a small triangle after a sharp flagpole move. Breakouts typically continue the prior trend, with targets based on the flagpole height.
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.
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