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Technical analysis

Flag and pennant

By Jarosław Wasiński • Published: • Updated:
Conventional candidate continuation structures after an impulse: a flag forms a small channel and a pennant a converging consolidation. Specify pole selection, boundaries, duration and breakout criteria. Pole-length projection is a reference. Volume filters depend on the data; the label or retracement depth alone does not guarantee future direction.
Example. A EUR/USD advance from 1.1000 to 1.1100 creates a 100-pip pole. A small declining channel follows, with its upper boundary at 1.1080 when crossed. Projecting the pole from that price gives 1.1180. This is geometry; an actual trade needs separate signal and execution rules.

Flag and pennant

A flag is a brief consolidation with approximately parallel boundaries, often sloping against the impulse. A pennant has converging boundaries. Both are conventionally associated with continuation, but the consolidation can also resolve in the opposite direction or remain without a directional move. The label does not determine its eventual result.

Boundaries and duration

Specify pole selection, retracement depth and maximum consolidation duration. Written limits distinguish the pattern from a broader channel or triangle. No single retracement proportion binds every definition; exceeding your threshold invalidates your rule rather than proves that a reversal has begun. Apply criteria before observing the break.

Volume and breakouts

Reduced activity during consolidation and an increase on the break can be additional conditions. For spot FX, identify whether the measure is feed tick counts or trades on a specified venue. That filter does not reveal global flow. Initial breaks and retests are different entries, while pole projection cannot replace evaluating costs, invalidation and exit timing.

FAQ

Must price continue after a flag?
No. Continuation is the traditional hypothesis, not a guarantee.
Does declining volume confirm the pattern?
It can be a method’s criterion. Meaning depends on the feed and tested results.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
  • Author of hundreds of in-depth market commentaries, structural analyses, and educational materials for traders and investors.
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All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.