Forex Chart Patterns – Flags and Pennants Chart Patterns
Posted on 26. Jul, 2007 by admin in Forex Chart Patterns
Flags and pennants are very short consolidation periods that appear within a fast moving trend. Both are preceded by a sharp move that is nearly a vertical line, and both show consolidation against the direction of the trend. The flag is a pattern formed by two parallel lines sloping against the trend, while the pennant is a pattern of two converging lines that appear very similar to the triangle or the wedge formation.
The breakout signal on a flag or a pennant almost always occurs in the direction of the original move, and when the market breaks out it usually moves decisively to continue the trend. Of course, since the pennant formation is in the shape of a triangle, it does fall into the category of triangles that has been previously discussed. What distinguishes the pennant, though, is the speed with which the market moves both before and after the pattern is created.
