Triangles, flags and pennants are continuation patterns — periods where price pauses and consolidates before, often, resuming the existing trend. Here's how to read the common ones.
Triangles
A triangle forms as price swings narrow into a point:
- Ascending triangle — flat resistance on top, rising support below. Often resolves upward.
- Descending triangle — flat support below, falling resistance above. Often resolves downward.
- Symmetrical triangle — both lines converge; direction is decided by which side breaks.
The squeeze reflects indecision tightening — until one side wins.
Flags and pennants
These appear after a sharp move (the "flagpole"):
- Flag — a small, tilted rectangle that drifts against the trend.
- Pennant — a tiny symmetrical triangle right after the spike.
Both represent a brief pause before the trend, frequently, continues in the original direction.
How to trade them
- Trade the break, not the squeeze — wait for a decisive break of the pattern's boundary.
- Use the prior move to estimate the target — the size of the flagpole projected from the breakout gives a rough objective.
- Beware false breaks — low-volume breaks often fail. Confirmation and support/resistance context matter.
The caveat
Continuation patterns continue the trend more often than not — not always. They fail, and they're easy to draw in hindsight. Always define risk with a stop just inside the pattern and size with the risk/reward calculator.
Consolidation is the market catching its breath. The breakout tells you whether the trend is ready to run again.
Education only — not financial advice.