📐 Pennant Pattern – Short-Term Continuation Signal

The Pennant Pattern is a short-term continuation formation that occurs after a sharp price movement (flagpole). It indicates a brief consolidation with converging trendlines before the prior trend resumes.

📘 What Is the Pennant Pattern?

The Pennant Pattern forms after a sharp price move (flagpole), followed by a small consolidation with converging trendlines. It is typically a continuation pattern, where the breakout continues in the direction of the prior trend.

• Occurs after a strong price move (flagpole).
• Small symmetrical triangle forms with converging trendlines.
• Volume decreases during the consolidation and rises on breakout.
• Breakout usually continues in the direction of the prior trend.

💡 Market Psychology

- Flagpole: Sharp move reflects strong buying or selling pressure. - Pennant: Price consolidates in a small triangle; traders pause and decide next move. - Breakout: Trend resumes in the direction of the flagpole with increasing volume.

✅ Pro Tip: Volume confirmation is crucial — look for higher volume on the breakout to validate the move.

⚙️ How to Trade Pennant Patterns

1. Identify the strong initial move (flagpole) followed by a small pennant consolidation.
2. Wait for the price to break out in the direction of the flagpole.
3. Enter a position in the breakout direction.
4. Place a stop-loss near the pennant consolidation area.
5. Set a target equal to the length of the flagpole projected from the breakout point.

🏁 Conclusion

Pennant patterns are reliable short-term continuation indicators. Correct identification and volume confirmation help traders capitalize on trend continuation opportunities.

“Pennants show a pause, not a reversal — when the trend resumes, it usually moves strongly.”