A pause after a sharp move. The shorter the more trustworthy; the longer the more it dissolves. Continuation patterns measured from the flagpole.
Flags and pennants are brief pause patterns. After a sharp move — the "flagpole", a strong impulsive leg — price contracts into a small range, takes a breath, then resumes in the original direction.
They are textbook continuation patterns. The trend has not ended; this is a visualisation of a pause within the trend as it catches its breath. The pause does not last long — one to four weeks is typical. Beyond that the character changes, and the formation has to be reinterpreted (as consolidation, perhaps as a reversal).
The difference between a flag and a pennant is shape only. A flag is a small parallelogram, tilted gently against the trend. A pennant is a small symmetrical triangle. The psychology inside is essentially the same; only the outline differs.
Members Only
Full access is reserved for members of the library.