Pennant Chart Definition

A pennant chart formation occurs after a security experiences an impulsive up or down move. After such a strong run-up, the security will take a "breather" before continuing in the direction of the primary trend. This breather resembles a symmetrical triangle, where two trendlines converge to a point, hence the term "pennant". While inside the pennant, there are a number of minor price fluctuations that occur on light volume. After this quiet period, the security will eventually erupt out of this consolidation zone with an increase in price and volume. The breakout from the pennant chart pattern will often times be equivalent to the impulsive move prior to entering the symmetrical triangle. The pennant chart formation is one of the more reliable continuation patterns.

Pennant Chart Example

Pennant Chart Pattern