EURGBP - What Is a Pennant?

21 thg 12, 2020

What Is a Pennant?
In technical analysis, a pennant is a type of continuation pattern formed when there is a large movement in a security, known as the flagpole, followed by a consolidation period with converging trend lines—the pennant—followed by a breakout movement in the same direction as the initial large movement, which represents the second half of the flagpole.


Pennants are continuation patterns where a period of consolidation is followed by a breakout used in technical analysis.
It's important to look at the volume in a pennant—the period of consolidation should have lower volume and the breakouts should occur on higher volume.
Most traders use pennants in conjunction with other forms of technical analysis that act as confirmation.

Understanding Pennants
Pennants, which are similar to flags in terms of structure, have converging trend lines during their consolidation period and last from one to three weeks. The volume at each period of the pennant is also important. The initial move must be met with large volume while the pennant should have weakening volume, followed by a large increase in volume during the breakout.

Here's an example of what a pennant looks like: