Definition
A pennant is a short-lived continuation pattern that forms immediately after a strong, near-vertical price move known as the flagpole. During the pennant, price consolidates into a small symmetrical triangle, with converging trendlines, before the original trend resumes.
The pennant is closely related to the flag — both follow a sharp move and signal a brief pause — but a pennant's boundaries converge to a point, whereas a flag's run parallel. Both are among the most reliable continuation patterns precisely because they are short and form against a backdrop of clear momentum.
Why it matters
How it works
A pennant develops when a burst of buying or selling drives price sharply in one direction, then participants pause to consolidate. Trading volume contracts as the pattern's converging trendlines tighten the range — a sign that the market is coiling rather than reversing.
The pattern is confirmed when price breaks out of the small triangle in the direction of the flagpole, usually on a renewed surge in volume. The measured-move target is found by projecting the height of the flagpole from the breakout point. Because pennants are short, a consolidation that drags on for many weeks is more likely a different pattern, such as a symmetrical triangle.