Flags and Pennants
Bullish flags are
characterized by lower tops and lower bottom. The pattern slants again the trend
with the trend lines running parallel.
Bearish Flags are
characterized by higher tops and higher bottoms. They slant against the trend.
Their trend lines are parallel also.
The flag and the pennant are quite similar
formations. At least the forecasting value is practically the same. However, the
top and bottom line are not converging but parallel
Pennants look much like
symmetrical triangles. Although they are typically smaller in size and duration.
Volume generally contracts during the pause and increases on the breakout.
The pennant resembles a small symmetrical
triangle. It is interpreted as a brief pause in a strongly trending market. The
move after the completion of this formation should duplicate the move proceeding