What is a Pennant?
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.
Key Takeaways
- Pennants are continuation patterns where a period of consolidation is followed by a breakout.
- 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.
- Most traders use pennants in conjunction with other forms of technical analysis that act as confirmation.
