Pennant
A short pause that forms after a sharp, fast move (the pole) and is made of two small, converging lines. Price rests briefly, then most often breaks in the direction of the pole, which is why it is read as a continuation pattern. It can form in a rise or a fall; the pole and the break set the direction.
How it forms
- Pole. Price rises or falls in a near-vertical move over few candles, often on high volume. Without a clear pole, the pattern is not a pennant.
- Pennant. At the top of the pole, price is squeezed into a small range. Lower highs and higher lows form two converging lines. Each line needs at least two touches.
- Small and short. The pennant is small compared with the pole. The pullback usually stays within about a third to a half of the pole. It is also short, usually lasting roughly 5 to 20 candles.
- Volume. Volume often falls clearly during the pennant.
- Completion. The pattern is complete when price closes outside the line on the pole's side. A candle whose wick crosses the line but closes back inside is not a break.
The thresholds here are approximate values commonly used in textbooks, not strict rules.
What it suggests
The pole shows one side taking clear control in a short time. The pennant is a breather after that move. A very shallow pullback can suggest that the side behind the move is not giving ground.
A pennant squeezes like a symmetrical triangle. The difference is context. The pole in front of it shows which way a break is more often expected. Even so, the direction is only settled by the break.
When it strengthens, when it weakens
Strengthens
- A steep pole on high volume
- A pennant that stays small and short compared with the pole
- Volume falling during the pennant and rising at the break
- The break coming before the apex
- A pole that has cleared a zone, with the pennant holding above (or below) it
Weakens
- A slow or choppy pole
- A pullback deeper than half the pole
- A pennant that drags on
- A strong zone close by in the pole's direction
- False breakouts, where a wick crosses the line but the close stays inside
The MarketLevelMap view
How it relates to zones
Because a pennant is small, it often forms right next to a single zone. Which side of the zone it forms on matters:
- If the pole cleared a zone and the pennant forms above it, the pennant may in fact be testing the zone's new role. If price squeezes without falling back into the zone, former resistance is acting as support.
- If the pole stopped just below a zone and the pennant forms there, price has not cleared that zone yet. A breakout then runs straight into the zone and may struggle more.
- The next zone in the pole's direction is a more realistic reference than the pole's length for where price may react again.
The same logic applies, mirrored, to a bearish pennant: if the pole broke a support zone and the pennant forms below it, that zone may now be acting as resistance.
When it completes
Close outside the line on the pole's side.
When it is invalidated
Before completion: If price closes outside the line on the side opposite the pole, or the pullback goes beyond roughly half of the pole, the pattern is not read as a pennant. A squeeze that lasts too long also loses the character of a pennant.
After completion: Even after a close in the direction of the break, if price returns into the pennant and closes outside the opposite line, the continuation scenario is considered invalid.
Often confused with
- FlagThe lines are parallel: price pulls back in a narrow channel that does not converge.
- Symmetrical TriangleThere is no sharp pole before it, and it lasts longer and is larger.
- Falling WedgeBoth lines slope the same way, rather than one up and one down.
For general information only. Not investment advice.Last updated: