Pennants and Triangles:
In the world of forex, the pennant is a pattern which takes shape by the consolidation and build up of price before a breakout/ continuation of the prevailing market direction/trend. Pennants are continuation patterns that resem- ble its 'cousin', the triangle pattern and are both constructed of lower highs bound by downtrend sloping resistance trend-line and higher lows bound by a rising uptrend line as displayed in the example below.
A pennant has to be preceded by a strong steep up move or down move that resembles a flagpole. No flagpole, then it's a triangle and not a pennant.
Pennants are continuation patterns that usually breakout in the direction of the previous trend that started.
The two trend-lines that construct the pennant converge at a point is known as the 'apex'. At first glance, that sounds like the exact description of a triangle. However, there are additional features that differentiate the forex pennant from the forex triangle. We go into more depth on the following pages.