#7 of 10 Chart Patterns Every Trader Needs to Know - Pennant or Flags
Pennant patterns, or flags, are created after an asset experience a period of upward movement, followed by a consolidation. Generally, there will be a significant increase during the early stages of the trend, before it enters into a series of smaller upward and downward movements.
Pennants can be either bullish or bearish, and they can represent a continuation or a reversal. The above chart is an example of a bullish continuation. In this respect, pennants can be a form of the bilateral pattern because they show either continuations or reversals.
A pennant may seem similar to a wedge pattern or a triangle pattern but note the importance that the wedge is narrower than pennants or triangles. Wedges differ from pennants because a wedge is always ascending or descending while pennants are always horizontal.
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