Flag and Pennant Pattern
FLAG AND PENNANT PATTERN
just a breather
1. There is a clear direction of the price trend;
2. This is followed by a consolidation and range bound movement; and
3. Next is the resumption of the trend.
The Flag Pattern
The flag pattern is covered by two parallel lines. This pattern can be flat or pointed in the opposite direction of the primary market trend. The pole is then formed by a line which represents the primary trend in the market. The pattern is seen as the market potentially just taking a “breather” after a big move. Then the market continues its primary trend.
The Pennant Pattern
In terms of setup and implications, the pennant pattern is similar to the flag pattern. The difference is that the consolidation phase of a pennant pattern is distinguished by converging trend lines rather than parallel trend lines.