Free Trading School · Level 8: Chart Patterns
Flags, pennants and triangles
After a sharp move, markets often rest before continuing. A flag is a small channel sloping against the trend. A pennant is a small symmetrical triangle. Both are continuation patterns: the move before them (the "pole") shows strong momentum, and the rest is traders catching their breath.
A bull flag: a strong pole, a gentle downward-sloping pause, then a breakout.
| Pattern | Shape | Usual bias |
|---|---|---|
| Bull flag | Small down-sloping channel after a rally | Continuation up |
| Ascending triangle | Flat resistance, rising lows | Breakout up more likely |
| Descending triangle | Flat support, falling highs | Breakdown more likely |
| Symmetrical triangle | Converging highs and lows | Follows the prior trend |
A common target is the measured move: add the length of the pole to the breakout point. Place the stop on the other side of the flag or below the last swing low inside the triangle.
The best flags are short and shallow. A pause that retraces most of the pole is no longer a flag.
Quick answers
After a sharp move, markets often rest before continuing. A flag is a small channel sloping against the trend. A pennant is a small symmetrical triangle. Both are continuation patterns: the move before them (the "pole") shows strong momentum, and the rest is traders catching their breath.
The best flags are short and shallow. A pause that retraces most of the pole is no longer a flag.
When price closes below the neckline. Until the neckline breaks it is just resistance.
Next lesson: Double tops and double bottoms