Pennant Pattern

The most common chart patterns, and what they mean to you as a trader, are highlighted here. Keep this by your desk and I promise it will be a huge help in your future trading. Just having them in your face every day will subconsciously help you learn to recognize them during live trading.

A pennant is created when there is a significant movement in the stock, followed by a period of consolidation – this creates the pennant shape due to the converging lines. A breakout movement then occurs in the same direction as the big stock move.

These are similar to flag patterns and tend to last between one and three weeks. There will be significant volume at the initial stock movement, followed by weaker volume in the pennant section, and growth in volume at the breakout.