Pennant
A Pennant forms right after a strong price move. Think of it like a mini-triangle. Price blasts in one direction (the pole), then consolidates in a small, converging range (the pennant). When price breaks out of that narrow range, it often continues in the original direction.
How to Identify
Flagpole. Look for a sharp move up or down.
Pennant Shape. Price starts narrowing into a tiny triangle.
Volume. Often fades during the pennant, then may pick up on the breakout.
How to Use
Entry: wait for a clean break past the pennant. Many jump in right as the breakout candle closes.
Stop: place it inside or just outside the pennant to manage risk if price whips back.
Target: measure the length of the flagpole and project that from the breakout to get a possible target.
Pro Tips
Confirm the breakout with momentum or volume.
Watch for fakeouts if the pennant is too choppy or if volume is absent.
Combine with other signals, like support/resistance zones, for extra clarity.
Exercise
Pull up a chart that shows a rapid move followed by a small converging pattern. Mark the flagpole and draw lines around the pennant. Imagine entering on a breakout and placing stops inside the pennant. Use backtesting to see if price reaches the projected target. Repeat across different markets and note your results.
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