Flag and pennant patterns

The topic of this article may not meet Wikipedia's general notability guideline. Please help to demonstrate the notability of the topic by citing reliable secondary sources that are independent of the topic and provide significant coverage of it beyond a mere trivial mention. If notability cannot be shown, the article is likely to be merged, redirected, or deleted. Find sources:  –  ·  ·  · scholar · JSTOR (January 2017) (Learn how and when to remove this template message)

Part of a series on
Finance
Markets Assets Bond Commodity Derivatives Foreign exchange Money Over-the-counter Private equity Real estate Spot Stock Participants Investor institutional Retail Speculator Locations Financial centres Offshore financial centres Conduit and sink OFCs
Instruments Bond Cash Collateralised debt obligation Credit default swap Time deposit (certificate of deposit) Credit line Deposit Derivative Futures contract Indemnity Insurance Letter of credit Loan Mortgage Option (call exotic put) Performance bonds Repurchase agreement Stock Security Syndicated loan Synthetic CDO
Corporate General Accounting Audit Capital budgeting Credit rating agency Risk management Financial statements Transactions Leveraged buyout Mergers and acquisitions Structured finance Venture capital Taxation Base erosion and profit shifting (BEPS) Corporate tax haven Tax inversion Tax haven Transfer pricing
Personal Credit / Debt Employment contract Financial planning Retirement Student loan
Public Government spending Final consumption expenditure Operations Redistribution Transfer payment Government revenue Taxation Deficit spending Budget (balance) Debt Non-tax revenue Warrant of payment
Banking Central bank Deposit account Fractional-reserve Full-reserve Loan Money supply Lists of banks Bank regulation Banking license Basel Accords Bank for International Settlements Financial Stability Board Deposit insurance Separation of investment and retail banking
Regulation · Financial law International Financial Reporting Standards ISO 31000 Professional certification Fund governance
Economic history Private equity and venture capital Recession Stock market bubble Stock market crash Accounting scandals
Business and Economics portal  Money portal
v t

The flag and pennant patterns are commonly found patterns in the price charts of financially traded assets (stocks, bonds, futures, etc.).^[1] The patterns are characterized by a clear direction of the price trend, followed by a consolidation and rangebound movement, which is then followed by a resumption of the trend.^[2] They are continuation patterns, and forms when the prices of stocks rallies sharply.^[2]

Flag pattern[]

The flag pattern is encompassed by two parallel lines. These lines can be either 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, which could be bullish or bearish, is seen as the market potentially just taking a "breather" after a big move before continuing its primary trend.^[3][4] The chart below illustrates a bull flag. A bear flag would trend in the opposite direction.^[5]

Pennant pattern[]

A classic pattern for technical analysts, the pennant pattern is identifiable by a large price move, followed by a continuation period and a breakout.^[6] The pattern resembles a flagpole. The pennant phase is identified by an initial large price movement indicating high volume transactions, followed by weaker price movement indicating low volume transactions. Traders earn by capitalizing on the breakout phase. The pennant pattern is identical to the flag pattern in its setup and implications; the only difference is that the consolidation phase of a pennant pattern is characterized by converging trend lines rather than parallel trend lines.^[7][2] The image below illustrates.

References[]

External links[]

• Analyzing Chart Patterns: Flags And Pennants at investopedia.com