As of 11/08/2024
  Indus: 43,989 +259.65 +0.6%  
  Trans: 17,354 +143.48 +0.8%  
  Utils: 1,032 +20.02 +2.0%  
  Nasdaq: 19,287 +17.32 +0.1%  
  S&P 500: 5,996 +22.44 +0.4%  
YTD
 +16.7%  
 +9.2%  
 +17.0%  
 +28.5%  
 +25.7%  
  Targets    Overview: 10/31/2024  
  Up arrow43,100 or 41,250 by 11/15/2024
  Up arrow16,800 or 15,700 by 11/15/2024
  Up arrow1,075 or 1,000 by 11/15/2024
  Up arrow19,000 or 17,600 by 11/15/2024
  Up arrow5,900 or 5,600 by 11/15/2024
As of 11/08/2024
  Indus: 43,989 +259.65 +0.6%  
  Trans: 17,354 +143.48 +0.8%  
  Utils: 1,032 +20.02 +2.0%  
  Nasdaq: 19,287 +17.32 +0.1%  
  S&P 500: 5,996 +22.44 +0.4%  
YTD
 +16.7%  
 +9.2%  
 +17.0%  
 +28.5%  
 +25.7%  
  Targets    Overview: 10/31/2024  
  Up arrow43,100 or 41,250 by 11/15/2024
  Up arrow16,800 or 15,700 by 11/15/2024
  Up arrow1,075 or 1,000 by 11/15/2024
  Up arrow19,000 or 17,600 by 11/15/2024
  Up arrow5,900 or 5,600 by 11/15/2024

Bulkowski on Pennants

Statistics updated on 8/27/2020.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 522 to 535.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

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Pennants are the workhorses of the day trader. They perform an invaluable service by marking the midway point in a move. However, they only work in this manner about 30% of the time (see the measure rule).

Pennant chart pattern
Pennant Chart Pattern

 

Pennants: Important Bull Market Results*

Overall performance rank for up/down breakouts (1 is best): Not applicable due to the nature of the pattern
Break even failure rate for up/down breakouts: 54%/54%
Average rise/decline: 7%/6%
Percentage meeting price target for up/down breakouts: 35%/32%

The above numbers are based on more than 1,600 perfect trades. See the glossary for definitions.

* The performance results for pennants are based on the short-term price swing, not the change from the breakout to the ultimate high or low as in most other chart patterns.

Pennant: Identification Guidelines

CharacteristicDiscussion
Price trendCan be any direction leading to the chart pattern.
ShapeLooks like a short symmetrical triangle.
TrendlinesPrices move between two converging trendlines.
3 weeksPennants are short, 3 weeks long or less. Patterns longer than that are symmetrical triangles, rising or falling wedges.
FlagpoleThe flagpole which leads to the pennant should be unusually steep and last several days.
Volume trendDownward trend 86% of the time.
BreakoutUpward 57% of the time.

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Pennant: Trading Tips

Trading TacticExplanation Pennant chart pattern measure rule
The Measure Rule
Pennant half staff move
Half Staff
Pennant tilt
Pennant Tilt
Tight versus loose pennant
Tight v. Loose
Measure ruleCompute the height from the start of the price swing (point A in the measure rule figure to the right) to the end of the price swing (B) and then multiply it by the above 'percentage meeting price target.' Add it (upward breakouts) to the bottom of the pennant (C) or subtract it (downward breakouts) from the top of the pennant (C) to get the target (D).
Half staffThe average time from the trend start (below the pennant) to the start of the pennant is 11 days. Price rises (from the close at trend start to pennant high) 19% over that period. The time after the pennant (pennant end to trend high) is 10 days to rise (pennant low to trend high) 14%. Thus, the trend before and after the pennant takes about the same time but price does not rise as far after the pennant. In fact, the trend after the pennant is equal to or longer than then inbound trend just 30% of the time. The half staff figure to the right shows an example of how pennants are supposed to work, with A equal to B.
Pennant tiltPerformance suffers when the pennant slopes in the direction of the prevailing price trend. The Pennant Tilt figure to the right shows an example of price tilting upward in a rising price trend.
Flat baseIf the pennant appears above (upward breakouts) or below (downward breakouts) a flat base then expect the move to be a large one.
Tight pennantsA tight pennant performs better than a loose one. A loose pennant is one in which price meanders, pokes outside the trendline boundary, contains white space, or looks jagged. The Tight v. Loose figure to the right shows an example.
Yearly lowPennants perform best within a third of the yearly low for downward breakouts only.

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Pennant: Example

Pennant chart pattern example

The above figure shows an example of a pennant chart pattern. The flagpole begins at point A and completes at B. Following that, the pennant appears from B to C, bounded by two converging trendlines then the decline resumes and bottoms at D.

-- Thomas Bulkowski

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See Also

 

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