An invented price line: a sharp rise, then a small triangle of narrowing swings, then a further rise, outlined by the flagpole along the first rise and two converging lines round the small triangle.
An invented chart, drawn to show the shape of a pennant. Not market data.
Also searched asbullish pennant · bearish pennant · pennant chart pattern · flag and pennant
How to recognise a pennant
- A steep move first.
- Then lower highs and higher lows: each swing smaller than the last.
- Two lines that converge, forming a small triangle.
- It is short. A pennant that lasts as long as the move before it is a triangle.
What it is taken to mean
It is read as a pause in which buyers and sellers briefly agree on a price, after a move in which they did not. Traders take a close outside the pennant, in the direction of the pole, as the earlier move carrying on.
That is a reading, and no more. A pattern is a description of what a price did, not a forecast of what it will do. Textbooks file this one under “continuation shapes”, which is a habit of naming and not a rule the market keeps.
How it is conventionally measured
As with a flag, the textbook measure is the length of the flagpole, set off from the point where the price left the pennant. It is a convention for describing the shape and not a prediction.
What traders check
- Whether a sharp move really came first.
- How small and how brief the triangle is, compared with the pole.
- Which way the price leaves it, on a close.
Where people go wrong
- Assuming the direction of the break before it has happened.
- Drawing converging lines through two touches each and calling it a pennant. Any two pairs of points make a pair of lines.
- Confusing it with a symmetrical triangle, which is larger, slower and has no pole.
On a real chart
Textbook shapes are rare. A real chart is ambiguous: the peaks are uneven, the lines can be drawn two or three ways, and the same candles are a pennant to one reader and something else to another. Most shapes are also recognised only once they are finished, which is after the move they are said to announce has begun.
The picture on this page is invented. It was drawn by hand to show the shape as plainly as possible, with every awkward detail left out. It is not market data and it records nothing that happened.
Questions people ask
- What is the difference between a pennant and a symmetrical triangle?
- Size and what came before. A pennant is small and brief and follows a sharp move, the pole. A symmetrical triangle is larger, takes longer and need not follow a sharp move.
- Can a pennant be bearish?
- Yes. After a sharp fall the same small triangle is called a bearish pennant.
- Does a pennant predict the next move?
- No. It describes what a price did while the shape formed. Published studies of chart patterns disagree about whether they tell anything about the next move, and the tidy examples in textbooks were chosen afterwards, when the outcome was known. It is one observation to weigh with others.
The words on this page
An explanation for study. It is not advice, a recommendation or a forecast, and a pattern described here says nothing certain about what a price will do next.