What is a pennant pattern?

A pennant pattern (flag pattern) is a breakout chart pattern that follows the main price trend and has a rectangular shape resembling a flag. It suggests if the trend would continue for a long time frame or would be reversed in a swift motion. Pennant pattern is a breakout chart pattern.

What is the difference between pennants and wedges?

Their difference is that Pennants are horizontal, but Wedges are either ascending or descending. That’s their main difference. These two patterns are like the Symmetrical Triangle pattern, but they are much smaller. Now you know the difference between Pennants and Wedges. But does this help you to become a better trader?

What is a pennant in technical analysis?

A pennant is a continuation pattern in technical analysis formed when there is a large movement in a security, known as the flagpole, followed by a consolidation period with converging trend lines - the pennant - followed by a breakout movement in the same direction as the initial large movement, which represents the second half of the flagpole.

What happens when a pennant breaks out?

When the security breaks out, the trader may look for above average volume to confirm that pattern and hold the position until it reaches its price target. The price target for pennants is often established by applying the initial flagpole's height to the point at which the price breaks out from the pennant.