GUIDELINES of Pennants forex trading strategy A pennant is a short triangular shaped chart pattern. It can act as a trend reversal or continuation pattern. Appearance short triangle bounded by two converging trend lines These patterns are usually preceded by a sharp advance or decline with heavy volume, and mark a midpoint of the move Price bounded by two trend lines Surrounding the price action converge, trend lines forming a small pennant shape. Price usually goes against the trend: It rises in a downtrend and falls in an uptrend. Three-week maximum Pennants are short patterns lasting from a few days to 3 weeks. Patterns longer than 3 weeks are symmetrical triangles or wedge Steep, quick price trend Look for a quick (steep) price move (up or down) leading to the pattern. Downward volume trend Volume usually trends downward throughout the pattern Measure rule Calculate the price difference between the start of the trend and the pennant. Prices should move at slightly less than this amount above (for uptrends) or below (for downtrends) the end of the pennant. Wait for breakout Close out trade Close out the trade when price stalls, usually as it approaches the measure rule target or a support/resistance zone Price trends pennants always rest upon a flagpole, so look for a strong price run leading to them. Two converging trendlines For pennants, price follows two converging trendlines. Volume in the pattern recedes. Breakout Can be in any direction. Duration pennants are shorter than three weeks A pennant appears atop a flagpole. For easy identification, look for the flagpole first—a strong straight-line price run. How often price touches the trendline borders is not important for pennants pennant can slope in any direction, but most often, it will lean against the prevailing price trend. If the chart pattern does not have a flagpole, then it is not a flag or a pennant. .
