Pennant Pattern Overview, Characteristics, Trading Strategies


Broad pennant denotes a commodore, and is a swallow-tailed flag, the tails tapering, and would meet, if the exterior lines were prolonged; those of a cornet could not. HPQ provides an example of a flag that forms after a sharp and sudden advance. The orientation of the triangle points to the lane where drivers should stay.

what is a pennant

This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. Any long, narrow, usually triangular flag, as used in naval signal hoists, for a school banner, etc. The pennant winners earn the right to play in MLB’s title round, the World Series. Investopedia requires writers to use primary sources to support their work.


No passing zones are stretches of roadway where drivers are not allowed to move into the adjacent lane to pass a vehicle in front. Discover the range of markets and learn how they work – with IG Academy’s online course. To buy or sell pennants, you’ll need to plan when to open your position, take a profit and cut a loss. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. Commissioning pennants were a sign that the ship was commissioned in the Royal Navy.

A bullish pennant pattern is created when the price action rallies and then moves sideways in a narrowing range before resuming the prevailing uptrend. A bear pennant stock pattern is formed when prices consolidate between two converging trend lines, and create a small triangular flag that slightly slopes upwards. Even though pennant patterns have a high success rate in predicting future price movements, sometimes they can lead to false breakouts and “whipsaw” your trade setups. When you draw two converging trendlines that connect the highs and lows of the consolidation, you’ll see a chart pattern that looks like a triangular flag on a pole. A bear pennant is a continuation pattern that forms when there is a strong downtrend, and the price action starts to consolidate in a small trading range. The pennant pattern, which is the consolidation period between two converging trend lines, forms the shape of a pennant.

It’s important to look at the volume in a pennant—the period of consolidation should have lower volume and the breakouts should occur on higher volume. Learning to spot technical patterns before prices begin to move Top 10 Technical Indicators For Trading In 2021 is one of the most critical aspects of day trading. As not one market move happens in a straight vertical fashion, the dominating side must play a tactical game and take breaks between the aggressive moves.

Check out this price movement from QQQ back in the summer of 2017. The breakout occurs when the price breaks one of these two converging trend lines. Plenty of stock charts will show candles that look to be in the form of a pennant or flag, however be sure to locate the flagpole too.

Continuation patterns indicate a pause in a trend and indicate that the previous direction will resume after a period of time. A chart formation is a recognizable pattern that occurs on a financial chart. How the pattern performed in the past provides insights when the pattern appears again. Your results may differ materially from those expressed or utilized by Warrior Trading due to a number of factors. We do not track the typical results of our past or current customers. As a provider of educational courses, we do not have access to the personal trading accounts or brokerage statements of our customers.


If market structure plays out…hummmm I wouldn’t dare to say this will happen, but if it did, it would be a textbook play. Given the sentiment of the market with economic outlook of South Africa and Coronovirus fears, it’s not far fetched. From equities, fixed income to derivatives, the CMSA certification bridges the gap from where you are now to where you want to be — a world-class capital markets analyst. Although a Pennant will act in a similar nature to a Flag pattern, the actual look of the trend is more like a Triangle pattern.

what is a pennant

Pennants, which are similar to flags in terms of structure, have converging trend lines during their consolidation period and last from one to three weeks. The initial move must be met with large volume while the pennant should have weakening volume, followed by a large how to trade nfp increase in volume during the breakout. A formation that checks all three boxes with a correction ending at around 38.2% is a textbook bullish pennant pattern. The shorter and milder the correction, the stronger the uptrend and the ultimate breakout usually is.

Traders will typically set a limit short order at the lower trendline. On a breakout of the lower trendline, traders will first look for above-average volume to help confirm a pennant svsfx pattern breakout. The exit direction of a pennant pattern depends on the movement that preceded it. The pennant’s formation can therefore occur in a bullish or bearish trend.

From our Multilingual Translation Dictionary

Another difference between the two is that the bearish pennant is a continuation pattern. A symmetrical triangle, on the other hand, does not have a defined outlook. It happens when a sharp increase in price is followed by a similar consolidation as shown above. A good example of this bullish pennant pattern is shown on the EUR/USD pair below. Unlike trading other chart patterns, the original range of a pennant is rarely used to plan where to take profit. Instead, the breakout often matches the size of the bear or bull move that preceded the consolidation.

what is a pennant

You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. Pennants are sought after by traders because they tend to lead to extended breakouts. So when you’re trading them, you want to find the perfect place to open your position and ride the subsequent move.

How to Trade a Bearish Pennant Pattern

By placing a buy order at $1.084, you can make the most from the following bull move. It’s important not to confuse bullish pennants with other patterns such as triangles, falling wedges and bullish flags. Bearish pennants and bullish pennants can indicate that major price action is on the cards – so understanding them is crucial for any technical trader. Here’s an introduction to how pennants work, and how to trade them. A breakout is when the price moves above a resistance level or moves below a support level.

Pennant vs. Symmetrical Triangle

This signals a pessimistic outlook on the market, and often leads to further declines after a breakdown from the pattern. Vertically oriented rectangular signs with white and black colors indicate regulatory information, such as speed limits. Pentagonal shapes alert drivers to school zone signs and mark route numbers on county highways. This publication is the guideline for the design of roadway border edgings, crosswalks, and bike lanes, as well as roadway signs and traffic signal devices, including pennant signs. The origin of the pennon flag goes back to Europe and the Middle Ages, and the battles of the time.

There are two sports events that particularly catch the attention when it comes to the pennant term. As a matter of fact, the National/American League championship is also called the pennant. The MLB’s winners are called the pennant winners and they get the Bitcoin Lifestyle Review 2021 right to play in the World Series. A similar rule applies to Australian sports, and yes, the high-flying pennant is also a must at the events. It’s been used since 1895 at games to proclaim the winning team, so everybody could see who the winner was.


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