Flags and pennants, patterns in technical analysis

Flags and pennants are categorized as a continuous pattern. They normally represent only short breaks in a dynamic stock. They are usually seen right after a quick move. The stock will then take off again in the same direction. Research shows that these patterns are many of the most reliable continuation patterns. Take a look at typical flags and pennants in different patterns. Bullish flags are identified with lower tops and lower bottoms, and with the pattern sloping towards the trend. But unlike wedges, their trend lines run parallel. Bear flags consist of higher tops and higher bottoms. Bear flags will also have a propensity to lean against the trend. Their trend lines also run parallel. Pennants look a lot like a symmetrical triangle. But pennants are normally smaller in size (volatility) and duration. The volume in most cases contracts during the break with an increase in the breakout.

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