Visual Guide to Chart Patterns

Flags and Pennants

Pennants remind me of those pointed streamers that line roped-off areas at festivals. They are the same as flags except that the trendlines bounding the pattern converge. In flags, they are parallel.

Exhibit 11.1 shows a sprinkling of flags and pennants.

Let us start with pennant B. This is the kind of pennant that traders dream about. The trend begins at A in a straight-line run up to the pennant (B). Price consolidates, forming a triangle shape (the pennant). After that, price resumes a strong move up to C. The AB move is about the same as BC. Thus, the pennant can act as a half-staff pattern; it can appear midway in a price ...