What is the difference between a triangle and a pennant?
Triangles and pennants look the same, but their timeframes and expectations are different. Pennants are short-term patterns that form after a steep advance or sharp decline. Pennants typically extend 1-3 weeks, after which a continuation of the prior move is expected. Anything longer is probably a triangle.
What is a pennant pattern?
Pennants are short-term patterns that form after a steep advance or sharp decline. Pennants typically extend 1-3 weeks, after which a continuation of the prior move is expected. Anything longer is probably a triangle.
How do you break out from a pennant pattern?
The breakout after a pennant pattern should occur at or near the point where the trendlines converge, called the apex. When dealing with a symmetrical triangle, however, it is optimal for price to break above or below the trendlines one-half to three-quarters of the way through the pattern.
How do you use pennants in trading?
Trading Pennant Patterns. Most traders use pennants in conjunction with other chart patterns or technical indicators that serve as confirmation. For example, traders may watch for relative strength index (RSI) levels to moderate during the consolidation phase and reach oversold levels, which opens the door for a potential move higher.
Why are pennants triangular?
Pennants are short-term patterns that form after a steep advance or sharp decline. Pennants typically extend 1-3 weeks, after which a continuation of the prior move is expected. Anything longer is probably a triangle. Triangles are medium-term or long-term patterns that form independent of the prior move.
What is the purpose of a pennant?
A pennant is a commemorative flag typically used to show support for a particular athletic team. Pennants have been historically used in all types of athletic levels: high school, collegiate, professional etc. Traditionally, pennants were made of felt and fashioned in the official colors of a particular team.
Is a pennant bullish or bearish?
Bullish vs bearish pennants: what's the difference?Bullish pennantsBearish pennantsArise when a market consolidates after a pronounced upward moveArise when a market consolidates after a pronounced downward moveIndicate the continuation of a bull marketIndicate the continuation of a bear market1 more row
What is the difference between a pennant and flag?
What is the difference between a flag and a pennant? The pennant pattern is identical to the flag pattern the only difference is that the consolidation phase of a pennant pattern is characterized by converging trend lines rather than parallel trend lines.
What is the difference between pennant and triangle?
Key Takeaways A symmetrical triangle is a chart pattern characterized by two converging trendlines connecting a series of sequential peaks and troughs. Pennants are continuation patterns where a period of consolidation is followed by a breakout.
What's another word for pennant?
What is another word for pennant?banderolebannerensignflagjackpennonstreamerburgeestandardguidon14 more rows
How do you read pennant patterns?
A Pennant pattern has to be preceded by a strong up or down move that resembles a flagpole. If there isn't a flagpole, then it's a triangle and not a Pennant. A Pennant tends to form a shallow retracement (typically less than 38% of the flagpole). A deep retracement is indicative of a triangle rather than a Pennant.
When should I buy a bullish pennant?
The first is simply to wait until the market breaks above its trend line: its line of resistance for bullish pennants, and support for bearish ones. The second is to use the general rule of thumb that markets will often revert briefly before a full breakout begins.
How reliable are pennant patterns?
The pennant pattern is one that you often see right next to the bull and bear flag pattern in the textbooks, but rarely does anyone talk about its low success rate. While the flag itself isn't an exceptional pattern at just under a 70% success rate, the pennants come in well below that.
Why are some flags triangular?
The flag gets folded into a triangle because it is actually meant to resemble a tri-cornered hat, like the ones worn by George Washington and other soldiers who served in the Continental Army during the Revolutionary War.
What does an ascending triangle mean?
An ascending triangle is generally considered to be a continuation pattern, meaning that the pattern is significant if it occurs within an uptrend or downtrend. Once the breakout from the triangle occurs, traders tend to aggressively buy or sell the asset depending on which direction the price broke out.
Can a pennant be a reversal?
The stop-loss level is often set at the lowest point of the pennant pattern, since a breakdown from these levels would invalidate the pattern and could mark the beginning of a longer-term reversal.
What does pennant mean in religion?
A church pennant is a pennant flown to indicate that a religious service is in progress. It is flown on ships and establishments (bases).
What does it mean to win the pennant?
Each Major League Baseball (MLB) season, one American League (AL) team wins the pennant, signifying that they are the league's champion and have the right to play in the World Series against the champion of the National League (NL).
Where did pennant flags come from?
The pennant was one of the principal varieties of flags carried during the Middle Ages. The traditional pennant resembles the guidon flag in shape, but is normally only half the size. It does not often contain coats of arms, but rather crests, mottos, and heraldic and ornamental designs.
What is a pennant in sailing?
A short. line, hanging from a reef point or the tack of a sail, and used for shortening. down.
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—follow ed by a breakout movement in the same direction as the initial large movement, which represents the second half of the flagpole.
Why do traders use pennants?
Most traders use pennants in conjunction with other forms of technical analysis that act as confirmation.
How long do pennants last?
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.
How to set a price target for a pennant?
The price target for pennants is often established by applying the initial flagpole's height to the point at which the price breaks out from the pennant. For instance, if a stock rises from $5.00 to $10.00 in a sharp rally, consolidates to around $8.50, and then breaks out from the pennant at $9.00, a trader might look for a $14.00 price target on the position—or $5.00 plus $9.00. The stop-loss level is often set at the lowest point of the pennant pattern, since a breakdown from these levels would invalidate the pattern and could mark the beginning of a longer-term reversal.
When does a stock create a pennant?
In the above example, the stock creates a pennant when it breaks out, experiences a period of consolidation, and then breaks out higher. The upper trend line resistance trend line of the pennant also corresponds to reaction highs. Traders could have watched for a breakout from these levels as a buying opportunity and profited from the subsequent breakout.
What does the flagpole represent?
In the image above, the flagpole represents the previous trend higher, the period of consolidation forms a pennant pattern, and traders watch for a breakout from the upper trend line of the symmetrical triangle .
How does a pennant form?
During this sideways movement price begins to squeeze with converging trend lines creating a pennant that will often be form as a triangle.
How does an ascending triangle pattern form?
The ascending triangle pattern is formed when there is a clear resistance level and price begins making a series of higher lows to form the triangle.
Why is the flag pattern called the flag pattern?
The flag pattern is given its name because it looks like a flag with a pole (the move higher or lower) and then the flag (the quick sideways pattern). These are normally short-term patterns that you will quickly identify as the market looking like it is stepping higher or lower. Bullish Flag Pattern Trading.
How to identify rising wedge pattern?
To identify a rising wedge chart pattern you will need to spot price forming upward sloping support and resistance levels.
What is wedge pattern?
Both wedge patterns are created when price begins forming converging trend lines. The wedge chart pattern can be used for both continuations and reversals depending on the market trend. Whereas a triangle does not have a bias and is not moving higher or lower, wedge patterns are either sloping higher or lower.
What is the continuation candlestick pattern?
This is where price makes a move, pauses and forms the inside bar, and then continues in the same direction.
What is symmetric triangle?
The symmetrical triangle pattern is a classic sideways pattern where the market is consolidating.
When is a pennant pattern considered a triangle?
In fact, if a pennant pattern drags on into its 12th or 13th week, it is usually considered to have become a triangle. The breakout after a pennant pattern should occur at or near the point where the trendlines converge, called the apex. When dealing with a symmetrical triangle, however, it is optimal for price to break above or below ...
What is the conical shape of the pennant?
Price consistently reaches higher lows and lower highs, creating two converging trendlines that form this conical shape. However, the pennant includes a flagpole at the beginning of the pattern, which is not present in the formation of the symmetrical triangle. The flagpole is a very important characteristic of the pennant and is created when price suddenly spikes or dives dramatically in the direction of the current trend, forming an almost vertical line. This sharp move is accompanied by heavy volume and marks the beginning of an aggressive move within the current trend. Price then pauses, forming the body of the pennant, before breaking out in the direction of the trend with renewed vigor.
What is a triangle pattern?
A symmetrical triangle chart pattern represents a period of consolidation before the price is forced to breakout or breakdown. 1 A breakdown from the lower trendline marks the start of a new bearish trend, while a breakout from the upper trendline indicates the start of a new bullish trend. 2 The pattern is also known as a wedge chart pattern .
What is a symmetrical triangle?
A symmetrical triangle is a chart pattern characterized by two converging trendlines connecting a series of sequential peaks and troughs.
What is the difference between a pennant and a symmetrical triangle?
Difference 2: Duration. A second difference between the symmetrical triangle and the pennant is their durations. The pennant is considered a short-term pattern that forms over a period of days or possibly weeks. Ideally, a pennant pattern lasts between one and four weeks. A triangle pattern can take much longer, ...
What is a pennant pattern?
Pennants. A pennant is a continuation pattern in technical analysis 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 ...
How long does a pennant last?
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 .
