Level 4 · Lesson 9 of 16 · 7 min read
Flags, Pennants, Triangles: Continuation Patterns
The brief pause before the trend takes its next leg.
Researched and written by Laurent Trader joke: "I finally found a perfect double bottom pattern!" *zooms out* "...oh, that is just noise on the monthly chart." Chart patterns depend on the timeframe. Always zoom out before getting excited.
Why Price Pauses in a Trend
Even in a strong trend, price doesn't move in a straight line. Traders take profits, new participants wait for better entries, and the market "breathes." Continuation patterns capture this pause and signal that the original trend will likely resume.
Flags and Pennants
Both form after a sharp, almost vertical move (the "flagpole"). The consolidation phase is brief.
Triangles
Triangles form over a longer time period. Price makes lower highs and/or higher lows, squeezing into a point. The breakout direction tells you where the trend goes next.
The flagpole measurement rule. For flags and pennants, the expected target after the breakout equals the length of the flagpole. If price rose 200 pips before the flag, the target after the breakout is approximately 200 more pips.
Key Takeaways
- • Continuation patterns form during a trend as price pauses and consolidates.
- • Bull flag: sharp move up, then slight downward drift (flag). Breakout continues the move up.
- • Pennant: sharp move, then converging price action. Breakout in the original direction.
- • Ascending triangle: flat resistance + rising lows. Usually breaks up. Descending: usually breaks down.