Pennant
A pennant is a continuation pattern featuring converging trendlines after a strong move, resembling a small symmetrical triangle before the trend resumes.
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How to Identify
A strong move (flagpole) precedes the pennant formation
Price consolidates in converging trendlines forming a small symmetrical triangle
Volume contracts steadily as the pennant narrows
The pennant typically lasts 1-3 weeks on daily charts
Breakout usually occurs in the direction of the prior trend
Trading Rules
Entry Rules
- Enter when price breaks out of the pennant boundary in the direction of the prior trend
- Confirm with volume expansion on the breakout candle
- Avoid trading breakouts against the prior trend direction
Exit Rules
- Place stop-loss on the opposite side of the pennant from your entry
- Target the measured move equal to the flagpole length
- Trail stops as the move progresses
Measure the length of the pole that preceded the pennant. Project that distance from the breakout point in the breakout direction.
Place stop-loss beyond the apex or opposite boundary of the pennant. For bullish breakouts, stop below the lower trendline.
Success Rate
66% according to Bulkowski
Success rates vary based on market conditions, timeframe, and trader experience. Always validate patterns with your own journal data.
Journaling Tips
Record the pole length and the pennant duration to assess the setup quality
Note the tightness of the converging lines as tighter pennants often produce faster breakouts
Track whether the breakout continued in the prior trend direction
The pennant is a short-duration continuation pattern that forms after a strong price move. It looks like a small symmetrical triangle preceded by a sharp rally or decline (the pole), and it signals that the prior move is likely to continue.
Pennant vs. Flag
The pennant and flag are closely related patterns with one key difference in structure:
- Flag: Parallel boundaries forming a channel that slopes against the trend
- Pennant: Converging boundaries forming a triangle shape
Both have similar success rates and use the same measured move target calculation. The primary distinction is visual.
Building the Setup
A valid pennant requires three components:
- The pole: A sharp, high-volume move that establishes the trend direction
- The pennant body: Converging trendlines with decreasing volume as price compresses
- The breakout: Price exits the pennant in the direction of the pole with expanding volume
The pole provides the energy, the pennant provides the pause, and the breakout releases the stored momentum.
Volume Is Your Guide
Volume tells you whether the pennant is valid:
- Pole: Heavy volume shows conviction
- Pennant body: Volume should decline steadily as the pattern tightens
- Breakout: Volume should surge, ideally exceeding the volume of the last few candles in the pennant
A breakout without volume increase is a warning sign that the move may not sustain.
Timeframe Selection
Pennants form across all timeframes. Intraday pennants on 15-minute charts are common after opening-hour surges. Daily pennants form during strong trending periods and can lead to multi-week moves.
Higher-timeframe pennants are generally more reliable because they represent more significant pauses in more established trends.
Tracking Your Pennant Trades
Use your journal to record the pole-to-pennant ratio (pole length vs. pennant duration), the volume contraction rate, and the breakout strength. After trading 15-20 pennants, your data will show your personal edge with this pattern and whether certain timeframes or market conditions produce better results.
Common Mistakes
Trading the breakout in the wrong direction against the prevailing trend
Entering inside the pennant before a clear breakout occurs
Using a target that is too small instead of the full measured move
Frequently Asked Questions
What is the difference between a pennant and a symmetrical triangle?
A pennant forms quickly after a strong move (the pole) and is relatively small. A symmetrical triangle is a larger formation that develops over a longer period without a preceding pole. The pennant is a continuation pattern while triangles can break either way.
Which direction do pennants break?
Pennants typically break in the direction of the prior trend (the pole). Bullish poles lead to upward breakouts, bearish poles lead to downward breakouts. Breakouts against the pole direction are less common and less reliable.
How tight should a pennant be?
Tighter pennants with steeply converging trendlines tend to produce more explosive breakouts. The price range should contract by at least 50% from the start of the pennant to the breakout point.
Start Tracking Your Patterns
Journal every pattern trade to discover which setups actually work for you.
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