Flag and Pennant Patterns

Flags and pennants are short continuation patterns that form after a sharp, almost vertical move known as the flagpole. A flag is a small rectangular consolidation that drifts slightly against the prior move; a pennant is a small symmetrical triangle in which the range narrows to a point. Both mark a pause where early participants take profit and new ones position themselves, and both are usually traded on a break of the pattern in the direction of the original impulse. A common measuring technique projects the length of the flagpole from the breakout point as a rough objective. Because these consolidations are small, they are easily invalidated: a break the other way cancels the continuation reading.